x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Washington | 91-1011792 | |
(State of Incorporation) | (I.R.S. Employer Identification Number) |
Large accelerated filer | x | Accelerated filer | ¨ | ||
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Page | |
Item 1: Financial Statements (Unaudited) | |
Item 4: Controls and Procedures | |
Item 1: Legal Proceedings | |
Item 1A: Risk Factors | |
Item 5: Other Information | |
Item 6: Exhibits | |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(restated) | (restated) | ||||||||||||||
(in thousands, except per share data) | |||||||||||||||
Revenues | $ | 612,401 | $ | 567,339 | $ | 1,176,092 | $ | 1,064,962 | |||||||
Cost of revenues | 421,318 | 393,283 | 800,899 | 733,842 | |||||||||||
Gross profit | 191,083 | 174,056 | 375,193 | 331,120 | |||||||||||
Operating expenses | |||||||||||||||
Sales and marketing | 48,845 | 40,974 | 93,493 | 82,511 | |||||||||||
Product development | 40,931 | 33,022 | 81,376 | 66,062 | |||||||||||
General and administrative | 35,118 | 33,285 | 68,449 | 66,342 | |||||||||||
Amortization of intangible assets | 16,197 | 16,766 | 31,794 | 34,577 | |||||||||||
Restructuring | 1,907 | — | 1,907 | — | |||||||||||
Total operating expenses | 142,998 | 124,047 | 277,019 | 249,492 | |||||||||||
Operating income | 48,085 | 50,009 | 98,174 | 81,628 | |||||||||||
Other income (expense) | |||||||||||||||
Interest income | 168 | 111 | 476 | 278 | |||||||||||
Interest expense | (11,420 | ) | (13,965 | ) | (23,534 | ) | (28,888 | ) | |||||||
Other income (expense), net | (2,477 | ) | (425 | ) | (4,073 | ) | (1,017 | ) | |||||||
Total other income (expense) | (13,729 | ) | (14,279 | ) | (27,131 | ) | (29,627 | ) | |||||||
Income before income taxes | 34,356 | 35,730 | 71,043 | 52,001 | |||||||||||
Income tax (provision) benefit | 80 | (10,419 | ) | (9,487 | ) | (1,440 | ) | ||||||||
Net income | $ | 34,436 | $ | 25,311 | $ | 61,556 | $ | 50,561 | |||||||
Earnings per common share - Basic | $ | 0.85 | $ | 0.63 | $ | 1.52 | $ | 1.26 | |||||||
Earnings per common share - Diluted | $ | 0.84 | $ | 0.61 | $ | 1.50 | $ | 1.23 | |||||||
Weighted average common shares outstanding - Basic | 40,670 | 40,329 | 40,608 | 40,261 | |||||||||||
Weighted average common shares outstanding - Diluted | 41,077 | 41,161 | 41,059 | 41,011 |
June 30, 2011 | December 31, 2010 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 168,284 | $ | 169,477 | |||
Accounts receivable, net | 377,835 | 371,662 | |||||
Inventories | 253,079 | 208,157 | |||||
Deferred tax assets current, net | 55,145 | 55,351 | |||||
Other current assets | 104,496 | 77,570 | |||||
Total current assets | 958,839 | 882,217 | |||||
Property, plant, and equipment, net | 301,458 | 299,242 | |||||
Deferred tax assets noncurrent, net | 12,714 | 35,050 | |||||
Other long-term assets | 68,967 | 28,242 | |||||
Intangible assets, net | 292,930 | 291,670 | |||||
Goodwill | 1,311,771 | 1,209,376 | |||||
Total assets | $ | 2,946,679 | $ | 2,745,797 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 268,462 | $ | 241,949 | |||
Other current liabilities | 41,630 | 49,690 | |||||
Wages and benefits payable | 94,855 | 110,479 | |||||
Taxes payable | 27,976 | 19,725 | |||||
Current portion of debt | 234,449 | 228,721 | |||||
Current portion of warranty | 29,999 | 24,912 | |||||
Unearned revenue | 49,722 | 28,258 | |||||
Total current liabilities | 747,093 | 703,734 | |||||
Long-term debt | 341,121 | 382,220 | |||||
Long-term warranty | 32,839 | 26,371 | |||||
Pension plan benefit liability | 69,675 | 61,450 | |||||
Deferred tax liabilities noncurrent, net | 51,539 | 54,412 | |||||
Other long-term obligations | 86,942 | 89,315 | |||||
Total liabilities | 1,329,209 | 1,317,502 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity | |||||||
Preferred stock | — | — | |||||
Common stock | 1,339,504 | 1,328,249 | |||||
Accumulated other comprehensive income (loss), net | 81,390 | (34,974 | ) | ||||
Retained earnings | 196,576 | 135,020 | |||||
Total shareholders’ equity | 1,617,470 | 1,428,295 | |||||
Total liabilities and shareholders’ equity | $ | 2,946,679 | $ | 2,745,797 |
Six Months Ended June 30, | |||||||
2011 | 2010 | ||||||
(restated) | |||||||
(in thousands) | |||||||
Operating activities | |||||||
Net income | $ | 61,556 | $ | 50,561 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 64,299 | 65,071 | |||||
Stock-based compensation | 9,518 | 9,121 | |||||
Amortization of prepaid debt fees | 2,265 | 2,762 | |||||
Amortization of convertible debt discount | 5,336 | 4,957 | |||||
Deferred taxes, net | 6,081 | (8,132 | ) | ||||
Other adjustments, net | 285 | 3,306 | |||||
Changes in operating assets and liabilities, net of acquisition: | |||||||
Accounts receivable | (12,106 | ) | (52,124 | ) | |||
Inventories | (36,668 | ) | (40,930 | ) | |||
Other current assets | (21,268 | ) | 8,375 | ||||
Other long-term assets | (22,993 | ) | (763 | ) | |||
Accounts payables, other current liabilities, and taxes payable | 16,523 | 42,463 | |||||
Wages and benefits payable | (21,531 | ) | 19,648 | ||||
Unearned revenue | 24,159 | 2,365 | |||||
Warranty | 9,510 | 14,355 | |||||
Other operating, net | 2,726 | (3,949 | ) | ||||
Net cash provided by operating activities | 87,692 | 117,086 | |||||
Investing activities | |||||||
Acquisitions of property, plant, and equipment | (28,712 | ) | (27,716 | ) | |||
Business acquisition, net of cash equivalents acquired | (14,635 | ) | — | ||||
Other investing, net | 513 | 4,495 | |||||
Net cash used in investing activities | (42,834 | ) | (23,221 | ) | |||
Financing activities | |||||||
Payments on debt | (55,630 | ) | (73,881 | ) | |||
Issuance of common stock | 2,553 | 6,812 | |||||
Other financing, net | (319 | ) | (2,237 | ) | |||
Net cash used in financing activities | (53,396 | ) | (69,306 | ) | |||
Effect of foreign exchange rate changes on cash and cash equivalents | 7,345 | (9,081 | ) | ||||
Increase (decrease) in cash and cash equivalents | (1,193 | ) | 15,478 | ||||
Cash and cash equivalents at beginning of period | 169,477 | 121,893 | |||||
Cash and cash equivalents at end of period | $ | 168,284 | $ | 137,371 | |||
Non-cash transactions: | |||||||
Property, plant, and equipment purchased but not yet paid, net | $ | 978 | $ | (3,491 | ) | ||
Fair value of contingent and deferred consideration payable for business acquisition | 5,108 | — | |||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for: | |||||||
Income taxes, net | $ | 6,842 | $ | 9,355 | |||
Interest, net of amounts capitalized | 15,927 | 21,178 |
• | Arrangements that do not include the deployment of our smart metering systems and technology are recognized as follows: |
◦ | Hardware revenues are recognized at the time of shipment, receipt by customer, or, if applicable, upon completion of customer acceptance provisions. |
◦ | If implementation services are essential to the functionality of the associated software, software and implementation revenues are recognized using either the percentage-of-completion methodology of contract accounting if project costs can be estimated, or the completed contract methodology if project costs cannot be reliably estimated. |
• | Arrangements to deploy our smart metering systems and technology are recognized as follows: |
◦ | Hardware revenues are recognized at the time of shipment, receipt by customer, or, if applicable, upon completion of customer acceptance provisions. |
◦ | Revenue from associated software and services is recognized using the units-of-delivery method of contract accounting, as the software is essential to the functionality of the related hardware and the implementation services are essential to the functionality of the associated software. This methodology often results in the deferral of costs and revenues as professional services and software implementation typically commence prior to deployment of hardware. |
Consolidated statement of operations | Three Months Ended June 30, 2010 | Six Months Ended June 30, 2010 | |||||||||||||
As previously reported | As restated | As previously reported | As restated | ||||||||||||
(in thousands, except per share data) | |||||||||||||||
Revenues | $ | 569,460 | $ | 567,339 | $ | 1,068,740 | $ | 1,064,962 | |||||||
Cost of revenues | 393,136 | 393,283 | 733,521 | 733,842 | |||||||||||
Gross profit | 176,324 | 174,056 | 335,219 | 331,120 | |||||||||||
Operating income | 52,277 | 50,009 | 85,727 | 81,628 | |||||||||||
Income before income taxes | 37,998 | 35,730 | 56,100 | 52,001 | |||||||||||
Income tax (provision) benefit | (11,098 | ) | (10,419 | ) | (2,413 | ) | (1,440 | ) | |||||||
Net income | 26,900 | 25,311 | 53,687 | 50,561 | |||||||||||
Earnings per common share - Basic | $ | 0.67 | $ | 0.63 | $ | 1.33 | $ | 1.26 | |||||||
Earnings per common share - Diluted | $ | 0.65 | $ | 0.61 | $ | 1.31 | $ | 1.23 |
Consolidated balance sheet | June 30, 2010 | ||||
As previously reported | As restated | ||||
(in thousands) | |||||
Accounts receivable, net | 366,476 | 366,240 | |||
Deferred tax assets noncurrent, net | 67,684 | 68,657 | |||
Long-term warranty | 22,953 | 23,274 | |||
Other long-term obligations | 67,908 | 71,478 | |||
Accumulated other comprehensive loss, net | (116,019 | ) | (116,047 | ) | |
Retained earnings | 83,937 | 80,811 |
Consolidated statement of cash flow | Six Months Ended June 30, 2010 | ||||||
As previously reported | As restated | ||||||
(in thousands) | |||||||
Operating activities | |||||||
Net income | $ | 53,687 | $ | 50,561 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Deferred taxes, net | (7,159 | ) | (8,132 | ) | |||
Changes in operating assets and liabilities, net of acquisition: | |||||||
Accounts receivable | (52,332 | ) | (52,124 | ) | |||
Unearned revenue | (1,205 | ) | 2,365 | ||||
Warranty | 14,034 | 14,355 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands, except per share data) | |||||||||||||||
Net income available to common shareholders | $ | 34,436 | $ | 25,311 | $ | 61,556 | $ | 50,561 | |||||||
Weighted average common shares outstanding - Basic | 40,670 | 40,329 | 40,608 | 40,261 | |||||||||||
Dilutive effect of convertible notes | — | 283 | — | 206 | |||||||||||
Dilutive effect of stock-based awards | 407 | 549 | 451 | 544 | |||||||||||
Weighted average common shares outstanding - Diluted | 41,077 | 41,161 | 41,059 | 41,011 | |||||||||||
Earnings per common share - Basic | $ | 0.85 | $ | 0.63 | $ | 1.52 | $ | 1.26 | |||||||
Earnings per common share - Diluted | $ | 0.84 | $ | 0.61 | $ | 1.50 | $ | 1.23 |
Accounts receivable, net | June 30, 2011 | December 31, 2010 | |||||
(in thousands) | |||||||
Trade receivables (net of allowance of $8,980 and $9,045) | $ | 348,736 | $ | 328,811 | |||
Unbilled receivables | 29,099 | 42,851 | |||||
Total accounts receivable, net | $ | 377,835 | $ | 371,662 |
Allowance for doubtful account activity | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Beginning balance | $ | 9,030 | $ | 5,870 | $ | 9,045 | $ | 6,339 | |||||||
Provision (release) of doubtful accounts, net | 298 | 742 | (48 | ) | 662 | ||||||||||
Accounts written-off | (505 | ) | (43 | ) | (552 | ) | (173 | ) | |||||||
Effects of change in exchange rates | 157 | (271 | ) | 535 | (530 | ) | |||||||||
Ending balance | $ | 8,980 | $ | 6,298 | $ | 8,980 | $ | 6,298 |
Inventories | June 30, 2011 | December 31, 2010 | |||||
(in thousands) | |||||||
Materials | $ | 132,303 | $ | 106,021 | |||
Work in process | 26,058 | 18,389 | |||||
Finished goods | 94,718 | 83,747 | |||||
Total inventories | $ | 253,079 | $ | 208,157 |
Property, plant, and equipment, net | June 30, 2011 | December 31, 2010 | |||||
(in thousands) | |||||||
Machinery and equipment | $ | 284,431 | $ | 265,113 | |||
Computers and purchased software | 69,894 | 63,077 | |||||
Buildings, furniture, and improvements | 150,987 | 146,661 | |||||
Land | 33,879 | 35,968 | |||||
Construction in progress, including purchased equipment | 24,600 | 20,531 | |||||
Total cost | 563,791 | 531,350 | |||||
Accumulated depreciation | (262,333 | ) | (232,108 | ) | |||
Property, plant, and equipment, net | $ | 301,458 | $ | 299,242 |
Depreciation expense | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Depreciation expense | $ | 16,571 | $ | 14,994 | $ | 32,505 | $ | 30,494 |
June 30, 2011 | December 31, 2010 | ||||||||||||||||||||||
Gross Assets | Accumulated Amortization | Net | Gross Assets | Accumulated Amortization | Net | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Core-developed technology | $ | 406,570 | $ | (302,669 | ) | $ | 103,901 | $ | 378,705 | $ | (274,198 | ) | $ | 104,507 | |||||||||
Customer contracts and relationships | 307,223 | (131,606 | ) | 175,617 | 282,997 | (110,539 | ) | 172,458 | |||||||||||||||
Trademarks and trade names | 77,078 | (64,196 | ) | 12,882 | 73,194 | (59,235 | ) | 13,959 | |||||||||||||||
Other | 11,177 | (10,647 | ) | 530 | 24,256 | (23,510 | ) | 746 | |||||||||||||||
Total intangible assets | $ | 802,048 | $ | (509,118 | ) | $ | 292,930 | $ | 759,152 | $ | (467,482 | ) | $ | 291,670 |
Six Months Ended June 30, | |||||||
2011 | 2010 | ||||||
(in thousands) | |||||||
Beginning balance, intangible assets, gross | $ | 759,152 | $ | 806,256 | |||
Intangible assets acquired | 10,297 | — | |||||
Assets no longer in use written-off | (8,369 | ) | — | ||||
Effect of change in exchange rates | 40,968 | (78,155 | ) | ||||
Ending balance, intangible assets, gross | $ | 802,048 | $ | 728,101 |
Years ending December 31, | Estimated Annual Amortization | ||
(in thousands) | |||
2011 (amount remaining at June 30, 2011) | $ | 32,306 | |
2012 | 50,234 | ||
2013 | 41,442 | ||
2014 | 34,082 | ||
2015 | 27,997 | ||
Beyond 2015 | 106,869 | ||
Total intangible assets, net | $ | 292,930 |
Itron North America | Itron International | Total Company | |||||||||
(in thousands) | |||||||||||
Goodwill balance at January 1, 2010 | $ | 197,515 | $ | 1,108,084 | $ | 1,305,599 | |||||
Effect of change in exchange rates | 89 | (159,606 | ) | (159,517 | ) | ||||||
Goodwill balance at June 30, 2010 | $ | 197,604 | $ | 948,478 | $ | 1,146,082 | |||||
Goodwill balance at January 1, 2011 | $ | 198,048 | $ | 1,011,328 | $ | 1,209,376 | |||||
Goodwill acquired | — | 10,251 | 10,251 | ||||||||
Effect of change in exchange rates | 205 | 91,939 | 92,144 | ||||||||
Goodwill balance at June 30, 2011 | $ | 198,253 | $ | 1,113,518 | $ | 1,311,771 |
June 30, 2011 | December 31, 2010 | ||||||
(in thousands) | |||||||
Term loans | |||||||
USD denominated term loan | $ | 200,616 | $ | 218,642 | |||
EUR denominated term loan | 151,350 | 174,031 | |||||
Convertible senior subordinated notes | 223,604 | 218,268 | |||||
Total debt | 575,570 | 610,941 | |||||
Current portion of long-term debt | (234,449 | ) | (228,721 | ) | |||
Long-term debt | $ | 341,121 | $ | 382,220 |
◦ | if the closing sale price per share of our common stock exceeds $78.19, which is 120% of the conversion price of $65.16, for at least 20 trading days in the 30 consecutive trading day period ending on the last trading day of the preceding fiscal quarter; |
◦ | between July 1, 2011 and August 1, 2011, and any time after August 1, 2024; |
◦ | during the five business days after any five consecutive trading day period in which the trading price of the convertible notes for each day was less than 98% of the average conversion value of the convertible notes; |
◦ | if the convertible notes are called for redemption; |
◦ | if a fundamental change occurs; or |
◦ | upon the occurrence of defined corporate events. |
June 30, 2011 | December 31, 2010 | ||||||
(in thousands) | |||||||
Face value of convertible notes | $ | 223,604 | $ | 223,604 | |||
Unamortized discount | — | (5,336 | ) | ||||
Net carrying amount of debt component | $ | 223,604 | $ | 218,268 | |||
Carrying amount of equity component | $ | 31,831 | $ | 31,831 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Contractual interest coupon | $ | 1,397 | $ | 1,397 | $ | 2,795 | $ | 2,795 | |||||||
Amortization of the discount on the liability component | 2,693 | 2,501 | 5,336 | 4,957 | |||||||||||
Total interest expense on convertible notes | $ | 4,090 | $ | 3,898 | $ | 8,131 | $ | 7,752 |
Fair Value | ||||||||||
Balance Sheet Location | June 30, 2011 | December 31, 2010 | ||||||||
(in thousands) | ||||||||||
Asset Derivatives | ||||||||||
Derivatives not designated as hedging instruments under ASC 815-20 | ||||||||||
Foreign exchange forward contracts | Other current assets | $ | 171 | $ | 63 | |||||
Liability Derivatives | ||||||||||
Derivatives designated as hedging instruments under ASC 815-20 | ||||||||||
Interest rate swap contracts | Other current liabilities | $ | 2,395 | $ | 5,845 | |||||
Interest rate swap contracts | Other long-term obligations | 182 | 975 | |||||||
Euro denominated term loan * | Current portion of debt | 4,794 | 4,402 | |||||||
Euro denominated term loan * | Long-term debt | 146,556 | 169,629 | |||||||
Total derivatives designated as hedging instruments under ASC 815-20 | $ | 153,927 | $ | 180,851 | ||||||
Derivatives not designated as hedging instruments under ASC 815-20 | ||||||||||
Foreign exchange forward contracts | Other current liabilities | $ | 200 | $ | 457 | |||||
Total liability derivatives | $ | 154,127 | $ | 181,308 |
2011 | 2010 | ||||||
(in thousands) | |||||||
Net unrealized loss on hedging instruments at January 1, | $ | (10,034 | ) | $ | (30,300 | ) | |
Unrealized gain (loss) on derivative instruments | (164 | ) | (2,542 | ) | |||
Unrealized gain (loss) on a nonderivative net investment hedging instrument | (9,262 | ) | 24,352 | ||||
Realized (gains) losses reclassified into net income (loss) | 2,774 | 4,197 | |||||
Net unrealized loss on hedging instruments at June 30, | $ | (16,686 | ) | $ | (4,293 | ) |
Derivatives in ASC 815-20 Cash Flow Hedging Relationships | Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) | Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Gain (Loss) Recognized in Income on Derivative (Ineffective Portion) | |||||||||||||||||||||||||
Location | Amount | Location | Amount | |||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||||||||||
Three Months Ended June 30, | ||||||||||||||||||||||||||||
Interest rate swap contracts | $ | (2,149 | ) | $ | (839 | ) | Interest expense | $ | (1,788 | ) | $ | (3,238 | ) | Interest expense | $ | (31 | ) | $ | (14 | ) | ||||||||
Six Months Ended June 30, | ||||||||||||||||||||||||||||
Interest rate swap contracts | $ | (4,477 | ) | $ | (4,122 | ) | Interest expense | $ | (4,171 | ) | $ | (6,810 | ) | Interest expense | $ | (80 | ) | $ | (74 | ) |
Nonderivative Financial Instruments in ASC 815-20 Net Investment Hedging Relationships | Euro Denominated Term Loan Designated as a Hedge of Our Net Investment in International Operations | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in thousands) | ||||||||||||||||
Gain (loss) recognized in OCI on derivative (Effective Portion) | ||||||||||||||||
Before tax | $ | (2,343 | ) | $ | 20,943 | $ | (14,923 | ) | $ | 39,498 | ||||||
Net of tax | $ | (1,452 | ) | $ | 12,908 | $ | (9,262 | ) | $ | 24,352 |
Derivatives Not Designated as Hedging Instrument under ASC 815-20 | Gain (Loss) Recognized on Derivatives in Other Income (Expense) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in thousands) | ||||||||||||||||
Foreign exchange forward contracts | $ | (1,259 | ) | $ | 3,316 | $ | (3,341 | ) | $ | 3,047 |
June 30, 2011 | December 31, 2010 | ||||||
(in thousands) | |||||||
Plan assets in other long term assets | $ | (468 | ) | $ | (412 | ) | |
Current portion of pension plan liability in wages and benefits payable | 2,910 | 2,656 | |||||
Long-term portion of pension plan liability | 69,675 | 61,450 | |||||
Net pension plan benefit liability | $ | 72,117 | $ | 63,694 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Service cost | $ | 601 | 475 | $ | 1,218 | $ | 1,000 | ||||||||
Interest cost | 969 | 844 | 1,886 | 1,750 | |||||||||||
Expected return on plan assets | (83 | ) | (71 | ) | (163 | ) | (148 | ) | |||||||
Amortization of actuarial net loss (gain) | 14 | (6 | ) | 28 | (13 | ) | |||||||||
Amortization of unrecognized prior service costs | 19 | — | 37 | — | |||||||||||
Net periodic benefit cost | $ | 1,520 | $ | 1,242 | $ | 3,006 | $ | 2,589 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Stock options | $ | 511 | $ | 952 | $ | 1,544 | $ | 2,295 | |||||||
Restricted stock units | 3,853 | 3,441 | 7,404 | 6,382 | |||||||||||
Unrestricted stock awards | 15 | 14 | 190 | 189 | |||||||||||
ESPP | 164 | 138 | 380 | 255 | |||||||||||
Total stock-based compensation | $ | 4,543 | $ | 4,545 | $ | 9,518 | $ | 9,121 | |||||||
Related tax benefit | $ | 1,257 | $ | 1,324 | $ | 2,659 | $ | 2,732 |
Employee Stock Options | |||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2011(1) | 2010(1) | 2011 | 2010 | ||||||||
Dividend yield | — | — | — | — | |||||||
Expected volatility | — | — | 46.6 | % | 48.7 | % | |||||
Risk-free interest rate | — | — | 2.0 | % | 2.3 | % | |||||
Expected life (years) | — | — | 4.85 | 4.61 |
Shares | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value (1) | Weighted Average Grant Date Fair Value | |||||||||||||
(in thousands) | (years) | (in thousands) | |||||||||||||||
Outstanding, January 1, 2010 | 1,179 | $ | 52.93 | 5.90 | $ | 22,863 | |||||||||||
Granted | 71 | 61.97 | $ | 27.18 | |||||||||||||
Exercised | (133 | ) | 41.51 | $ | 4,114 | ||||||||||||
Outstanding, June 30, 2010 | 1,117 | $ | 54.89 | 6.04 | $ | 15,391 | |||||||||||
Exercisable and expected to vest, June 30, 2010 | 1,104 | $ | 54.73 | 6.01 | $ | 15,379 | |||||||||||
Exercisable, June 30, 2010 | 963 | $ | 52.03 | 5.61 | $ | 15,241 | |||||||||||
Outstanding, January 1, 2011 | 1,102 | $ | 55.21 | 5.58 | $ | 10,883 | |||||||||||
Granted | 78 | 56.64 | $ | 23.93 | |||||||||||||
Exercised | (26 | ) | 19.91 | $ | 989 | ||||||||||||
Expired | (1 | ) | 7.00 | ||||||||||||||
Outstanding, June 30, 2011 | 1,153 | $ | 56.13 | 5.48 | $ | 5,903 | |||||||||||
Exercisable and expected to vest, June 30, 2011 | 1,145 | $ | 56.12 | 5.45 | $ | 5,903 | |||||||||||
Exercisable, June 30, 2011 | 1,029 | $ | 55.85 | 5.05 | $ | 5,903 |
(1) | The aggregate intrinsic value of outstanding stock options represents amounts that would have been received by the optionees had all in- the-money options been exercised on that date. Specifically, it is the amount by which the market value of Itron’s stock exceeded the exercise price of the outstanding in-the-money options before applicable income taxes, based on our closing stock price on the last business day of the period. The aggregate intrinsic value of stock options exercised during the period is calculated based on our stock price at the date of exercise. |
Number of Restricted Stock Units | Weighted Average Grant Date Fair Value | Aggregate Intrinsic Value(1) | ||||||||
(in thousands) | (in thousands) | |||||||||
Outstanding, January 1, 2010 | 326 | |||||||||
Granted(2) | 210 | $ | 63.52 | |||||||
Released | (75 | ) | $ | 4,965 | ||||||
Forfeited | (12 | ) | ||||||||
Outstanding, June 30, 2010 | 449 | |||||||||
Outstanding, January 1, 2011 | 588 | |||||||||
Granted(2) | 255 | $ | 56.64 | |||||||
Released | (192 | ) | $ | 15,007 | ||||||
Forfeited | (5 | ) | ||||||||
Outstanding, June 30, 2011 | 646 | |||||||||
Expected to vest, June 30, 2011 | 545 | $ | 26,268 |
(1) | The aggregate intrinsic value is the market value of the stock, before applicable income taxes, based on the closing price on the stock release dates or at the end of the period for restricted stock units expected to vest. |
(2) | These restricted stock units do not include the respective 2010 and 2011 awards under the Performance Awards Agreement, which are not eligible for vesting as of June 30 of each respective year. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
Shares of unrestricted stock issued | 276 | 192 | 3,453 | 2,766 | |||||||||||
Weighted average grant date fair value | $ | 54.17 | $ | 77.69 | $ | 54.96 | $ | 68.49 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
Shares of stock sold to employees(1) | 25,567 | 10,736 | 42,625 | 23,086 | |||||||||||
Weighted average fair value per ESPP award(2) | $ | 7.22 | $ | 9.27 | $ | 7.88 | $ | 9.95 |
(1) | Stock sold to employees during each fiscal quarter under the ESPP is associated with the offering period ending on the last day of the previous fiscal quarter. |
(2) | Relating to awards associated with the offering period during the three and six months ended June 30. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Net interest and penalties expense (benefit) | $ | 113 | $ | (502 | ) | $ | 108 | $ | 296 |
June 30, 2011 | December 31, 2010 | ||||||
(in thousands) | |||||||
Accrued interest | $ | 4,766 | $ | 4,403 | |||
Accrued penalties | 3,574 | 3,233 |
June 30, 2011 | December 31, 2010 | ||||||
(in thousands) | |||||||
Unrecognized tax benefits related to uncertain tax positions | $ | 29,162 | $ | 42,175 | |||
The amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate | 29,089 | 30,832 |
June 30, 2011 | December 31, 2010 | ||||||
(in thousands) | |||||||
Credit facility(1) | |||||||
Multicurrency revolving line of credit | $ | 315,000 | $ | 240,000 | |||
Standby LOC’s issued and outstanding | (39,970 | ) | (43,540 | ) | |||
Net available for additional borrowings and LOC’s | $ | 275,030 | $ | 196,460 | |||
Unsecured multicurrency revolving lines of credit with various financial institutions | |||||||
Total lines of credit | $ | 74,685 | $ | 49,122 | |||
Standby LOC’s issued and outstanding | (32,329 | ) | (21,784 | ) | |||
Short-term borrowings(2) | (264 | ) | (66 | ) | |||
Net available for additional borrowings and LOC’s | $ | 42,092 | $ | 27,272 | |||
Unsecured surety bonds in force | $ | 133,352 | $ | 120,109 |
(1) | See Note 6 for details regarding our credit facility, which is secured. |
(2) | Short-term borrowings are included in “Other current liabilities” on the Consolidated Balance Sheets. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Beginning balance | $ | 59,163 | $ | 33,353 | $ | 51,283 | $ | 33,873 | |||||||
New product warranties | 2,196 | 3,221 | 4,079 | 6,017 | |||||||||||
Other changes/adjustments to warranties | 5,631 | 14,366 | 14,643 | 15,596 | |||||||||||
Reclassification from other current liabilities | — | 2,687 | — | 2,878 | |||||||||||
Claims activity | (4,768 | ) | (3,317 | ) | (9,215 | ) | (7,063 | ) | |||||||
Effect of change in exchange rates | 616 | (786 | ) | 2,048 | (1,777 | ) | |||||||||
Ending balance, June 30 | 62,838 | 49,524 | 62,838 | 49,524 | |||||||||||
Less: current portion of warranty | 29,999 | 26,250 | 29,999 | 26,250 | |||||||||||
Long-term warranty | $ | 32,839 | $ | 23,274 | $ | 32,839 | $ | 23,274 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Itron North America | $ | 3,625 | $ | 6,068 | $ | 6,514 | $ | 8,739 | |||||||
Itron International | 4,202 | 11,519 | 3,650 | 12,874 | |||||||||||
Total warranty expense | $ | 7,827 | $ | 17,587 | $ | 10,164 | $ | 21,613 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Beginning balance | $ | 17,193 | $ | 7,459 | $ | 14,637 | $ | 5,870 | |||||||
Unearned revenue for new extended warranties | 2,215 | 2,587 | 5,148 | 4,546 | |||||||||||
Unearned revenue recognized | (299 | ) | (381 | ) | (676 | ) | (751 | ) | |||||||
Ending balance, June 30 | 19,109 | 9,665 | 19,109 | 9,665 | |||||||||||
Less: current portion of unearned revenue for extended warranty | 1,160 | 1,319 | 1,160 | 1,319 | |||||||||||
Long-term unearned revenue for extended warranty within Other long-term obligations | $ | 17,949 | $ | 8,346 | $ | 17,949 | $ | 8,346 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Plan costs | $ | 5,927 | $ | 4,316 | $ | 12,671 | $ | 9,402 |
June 30, 2011 | December 31, 2010 | ||||||
(in thousands) | |||||||
IBNR accrual | $ | 2,386 | $ | 2,056 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Net income (loss) | $ | 34,436 | $ | 25,311 | $ | 61,556 | $ | 50,561 | |||||||
Foreign currency translation adjustment, net | 23,097 | (115,021 | ) | 123,544 | (212,499 | ) | |||||||||
Net unrealized gain (loss) on derivative instruments, designated as cash flow hedges, net | (224 | ) | (517 | ) | (164 | ) | (2,542 | ) | |||||||
Net unrealized gain (loss) on a nonderivative net investment hedging instrument, net | (1,452 | ) | 12,908 | (9,262 | ) | 24,352 | |||||||||
Net hedging (gain) loss reclassified into net income (loss), net | 1,332 | 1,995 | 2,774 | 4,197 | |||||||||||
Pension plan benefits liability adjustment, net | 24 | (117 | ) | (528 | ) | (685 | ) | ||||||||
Total comprehensive income (loss) | $ | 57,213 | $ | (75,441 | ) | $ | 177,920 | $ | (136,616 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Foreign currency translation adjustment | $ | (67 | ) | $ | (72 | ) | $ | (412 | ) | $ | (585 | ) | |||
Net unrealized gain (loss) on derivative instruments designated as cash flow hedges | 137 | 322 | 142 | 1,580 | |||||||||||
Net unrealized gain (loss) on a nonderivative net investment hedging instrument | 891 | (8,035 | ) | 5,661 | (15,146 | ) | |||||||||
Net hedging (gain) loss reclassified into net income (loss) | (817 | ) | (1,243 | ) | (1,703 | ) | (2,613 | ) | |||||||
Pension plan benefits liability adjustment | (9 | ) | 38 | 217 | 221 | ||||||||||
Total income tax (provision) benefit on other comprehensive income (loss) | $ | 135 | $ | (8,990 | ) | $ | 3,905 | $ | (16,543 | ) |
June 30, 2011 | December 31, 2010 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Assets | (in thousands) | ||||||||||||||
Cash and cash equivalents | $ | 168,284 | $ | 168,284 | $ | 169,477 | $ | 169,477 | |||||||
Foreign exchange forwards | 171 | 171 | 63 | 63 | |||||||||||
Liabilities | |||||||||||||||
Term loans | |||||||||||||||
USD denominated term loan | $ | 200,616 | $ | 201,619 | $ | 218,642 | $ | 219,462 | |||||||
EUR denominated term loan | 151,350 | 152,107 | 174,031 | 174,684 | |||||||||||
Convertible senior subordinated notes | 223,604 | 224,163 | 218,268 | 236,461 | |||||||||||
Interest rate swaps | 2,577 | 2,577 | 6,820 | 6,820 | |||||||||||
Foreign exchange forwards | 200 | 200 | 457 | 457 |
Itron North America | Standard electricity (electronic), gas, and water meters; advanced and smart electricity and water meters and communication modules; advanced and smart gas communication modules; advanced systems including handheld, mobile, and fixed network collection technologies; smart network technologies; meter data management software; knowledge application solutions; and professional services including implementation, installation, consulting, and analysis. |
Itron International | Standard electricity (electromechanical and electronic), gas, and water meters; advanced electricity, gas, and water meters; advanced water communication modules; smart electricity meters and communication modules; prepayment systems, including smart key, keypad, and smart card communication technologies; advanced systems including handheld, mobile, and fixed network collection technologies; smart network technologies; meter data management software; knowledge application solutions; and professional services including implementation, installation, consulting/analysis, and system management. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Revenues | |||||||||||||||
Itron North America | $ | 288,224 | $ | 301,143 | $ | 565,206 | $ | 542,702 | |||||||
Itron International | 324,177 | 266,196 | 610,886 | 522,260 | |||||||||||
Total Company | $ | 612,401 | $ | 567,339 | $ | 1,176,092 | $ | 1,064,962 | |||||||
Gross profit | |||||||||||||||
Itron North America | $ | 96,958 | $ | 100,972 | $ | 191,680 | $ | 179,131 | |||||||
Itron International | 94,125 | 73,084 | 183,513 | 151,989 | |||||||||||
Total Company | $ | 191,083 | $ | 174,056 | $ | 375,193 | $ | 331,120 | |||||||
Operating income (loss) | |||||||||||||||
Itron North America | $ | 42,739 | $ | 55,384 | $ | 86,532 | $ | 87,420 | |||||||
Itron International | 16,483 | 5,017 | 32,711 | 15,454 | |||||||||||
Corporate unallocated | (11,137 | ) | (10,392 | ) | (21,069 | ) | (21,246 | ) | |||||||
Total Company | 48,085 | 50,009 | 98,174 | 81,628 | |||||||||||
Total other income (expense) | (13,729 | ) | (14,279 | ) | (27,131 | ) | (29,627 | ) | |||||||
Income before income taxes | $ | 34,356 | $ | 35,730 | $ | 71,043 | $ | 52,001 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
United States and Canada | $ | 285,931 | $ | 299,502 | $ | 560,393 | $ | 538,502 | |||||||
Europe | 228,354 | 192,864 | 431,185 | 388,348 | |||||||||||
Other | 98,116 | 74,973 | 184,514 | 138,112 | |||||||||||
Total revenues | $ | 612,401 | $ | 567,339 | $ | 1,176,092 | $ | 1,064,962 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Itron North America | $ | 11,176 | $ | 11,441 | $ | 22,347 | $ | 22,728 | |||||||
Itron International | 21,591 | 20,352 | 41,950 | 42,342 | |||||||||||
Corporate Unallocated | 1 | — | 2 | 1 | |||||||||||
Total Company | $ | 32,768 | $ | 31,793 | $ | 64,299 | $ | 65,071 |
Parent | Guarantor Subsidiary | Combined Non-guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
(in thousands) | |||||||||||||||||||
Revenues | $ | 289,090 | $ | — | $ | 345,332 | $ | (22,021 | ) | $ | 612,401 | ||||||||
Cost of revenues | 194,728 | — | 248,611 | (22,021 | ) | 421,318 | |||||||||||||
Gross profit | 94,362 | — | 96,721 | — | 191,083 | ||||||||||||||
Operating expenses | |||||||||||||||||||
Sales and marketing | 18,195 | — | 30,650 | — | 48,845 | ||||||||||||||
Product development | 26,673 | — | 14,258 | — | 40,931 | ||||||||||||||
General and administrative | 13,529 | — | 21,589 | — | 35,118 | ||||||||||||||
Amortization of intangible assets | 3,512 | — | 12,685 | — | 16,197 | ||||||||||||||
Restructuring | 501 | — | 1,406 | — | 1,907 | ||||||||||||||
Total operating expenses | 62,410 | — | 80,588 | — | 142,998 | ||||||||||||||
Operating income | 31,952 | — | 16,133 | — | 48,085 | ||||||||||||||
Other income (expense) | |||||||||||||||||||
Interest income | 57 | 842 | 134 | (865 | ) | 168 | |||||||||||||
Interest expense | (12,178 | ) | — | (107 | ) | 865 | (11,420 | ) | |||||||||||
Other income (expense), net | (1,436 | ) | — | (1,041 | ) | — | (2,477 | ) | |||||||||||
Total other income (expense) | (13,557 | ) | 842 | (1,014 | ) | — | (13,729 | ) | |||||||||||
Income before income taxes | 18,395 | 842 | 15,119 | — | 34,356 | ||||||||||||||
Income tax (provision) benefit | (2,823 | ) | — | 2,903 | — | 80 | |||||||||||||
Equity in earnings of guarantor and non-guarantor subsidiaries, net | 18,864 | — | — | (18,864 | ) | — | |||||||||||||
Net income | $ | 34,436 | $ | 842 | $ | 18,022 | $ | (18,864 | ) | $ | 34,436 |
Parent | Guarantor Subsidiary | Combined Non-guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
(in thousands) | |||||||||||||||||||
Revenues | $ | 298,380 | $ | — | $ | 283,082 | $ | (14,123 | ) | $ | 567,339 | ||||||||
Cost of revenues | 199,882 | — | 207,524 | (14,123 | ) | 393,283 | |||||||||||||
Gross profit | 98,498 | — | 75,558 | — | 174,056 | ||||||||||||||
Operating expenses | |||||||||||||||||||
Sales and marketing | 15,706 | — | 25,268 | — | 40,974 | ||||||||||||||
Product development | 21,051 | — | 11,971 | — | 33,022 | ||||||||||||||
General and administrative | 13,467 | — | 19,818 | — | 33,285 | ||||||||||||||
Amortization of intangible assets | 4,086 | — | 12,680 | — | 16,766 | ||||||||||||||
Total operating expenses | 54,310 | — | 69,737 | — | 124,047 | ||||||||||||||
Operating income | 44,188 | — | 5,821 | — | 50,009 | ||||||||||||||
Other income (expense) | |||||||||||||||||||
Interest income | 116 | 776 | 87 | (868 | ) | 111 | |||||||||||||
Interest expense | (14,621 | ) | — | (212 | ) | 868 | (13,965 | ) | |||||||||||
Other income (expense), net | 4,002 | — | (4,427 | ) | — | (425 | ) | ||||||||||||
Total other income (expense) | (10,503 | ) | 776 | (4,552 | ) | — | (14,279 | ) | |||||||||||
Income before income taxes | 33,685 | 776 | 1,269 | — | 35,730 | ||||||||||||||
Income tax benefit (provision) | (12,539 | ) | — | 2,120 | — | (10,419 | ) | ||||||||||||
Equity in earnings of guarantor and non-guarantor subsidiaries, net | 4,165 | — | — | (4,165 | ) | — | |||||||||||||
Net income | $ | 25,311 | $ | 776 | $ | 3,389 | $ | (4,165 | ) | $ | 25,311 |
Parent | Guarantor Subsidiary | Combined Non-guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
(in thousands) | |||||||||||||||||||
Revenues | $ | 562,653 | $ | — | $ | 653,623 | $ | (40,184 | ) | $ | 1,176,092 | ||||||||
Cost of revenues | 377,003 | — | 464,080 | (40,184 | ) | 800,899 | |||||||||||||
Gross profit | 185,650 | — | 189,543 | — | 375,193 | ||||||||||||||
Operating expenses | |||||||||||||||||||
Sales and marketing | 35,210 | — | 58,283 | — | 93,493 | ||||||||||||||
Product development | 51,864 | — | 29,512 | — | 81,376 | ||||||||||||||
General and administrative | 26,474 | — | 41,975 | — | 68,449 | ||||||||||||||
Amortization of intangible assets | 7,024 | — | 24,770 | — | 31,794 | ||||||||||||||
Restructuring | 501 | — | 1,406 | — | 1,907 | ||||||||||||||
Total operating expenses | 121,073 | — | 155,946 | — | 277,019 | ||||||||||||||
Operating income | 64,577 | — | 33,597 | — | 98,174 | ||||||||||||||
Other income (expense) | |||||||||||||||||||
Interest income | 14,902 | 1,668 | 411 | (16,505 | ) | 476 | |||||||||||||
Interest expense | (24,997 | ) | — | (15,042 | ) | 16,505 | (23,534 | ) | |||||||||||
Other income (expense), net | (2,603 | ) | — | (1,470 | ) | — | (4,073 | ) | |||||||||||
Total other income (expense) | (12,698 | ) | 1,668 | (16,101 | ) | — | (27,131 | ) | |||||||||||
Income before income taxes | 51,879 | 1,668 | 17,496 | — | 71,043 | ||||||||||||||
Income tax (provision) benefit | (14,190 | ) | — | 4,703 | — | (9,487 | ) | ||||||||||||
Equity in earnings of guarantor and non-guarantor subsidiaries, net | 23,867 | — | — | (23,867 | ) | — | |||||||||||||
Net income | $ | 61,556 | $ | 1,668 | $ | 22,199 | $ | (23,867 | ) | $ | 61,556 |
Parent | Guarantor Subsidiary | Combined Non-guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
(in thousands) | |||||||||||||||||||
Revenues | $ | 539,253 | $ | — | $ | 551,911 | $ | (26,202 | ) | $ | 1,064,962 | ||||||||
Cost of revenues | 364,772 | — | 395,272 | (26,202 | ) | 733,842 | |||||||||||||
Gross profit | 174,481 | — | 156,639 | — | 331,120 | ||||||||||||||
Operating expenses | |||||||||||||||||||
Sales and marketing | 31,273 | — | 51,238 | — | 82,511 | ||||||||||||||
Product development | 42,229 | — | 23,833 | — | 66,062 | ||||||||||||||
General and administrative | 27,250 | — | 39,092 | — | 66,342 | ||||||||||||||
Amortization of intangible assets | 8,172 | — | 26,405 | — | 34,577 | ||||||||||||||
Total operating expenses | 108,924 | — | 140,568 | — | 249,492 | ||||||||||||||
Operating income | 65,557 | — | 16,071 | — | 81,628 | ||||||||||||||
Other income (expense) | |||||||||||||||||||
Interest income | 475 | 1,534 | 226 | (1,957 | ) | 278 | |||||||||||||
Interest expense | (30,201 | ) | — | (644 | ) | 1,957 | (28,888 | ) | |||||||||||
Other income (expense), net | 2,973 | — | (3,990 | ) | — | (1,017 | ) | ||||||||||||
Total other income (expense) | (26,753 | ) | 1,534 | (4,408 | ) | — | (29,627 | ) | |||||||||||
Income before income taxes | 38,804 | 1,534 | 11,663 | — | 52,001 | ||||||||||||||
Income tax (provision) benefit | (2,792 | ) | — | 1,352 | — | (1,440 | ) | ||||||||||||
Equity in earnings of guarantor and non-guarantor subsidiaries, net | 14,549 | — | — | (14,549 | ) | — | |||||||||||||
Net income | $ | 50,561 | $ | 1,534 | $ | 13,015 | $ | (14,549 | ) | $ | 50,561 |
Parent | Guarantor Subsidiary | Combined Non-guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
(in thousands) | |||||||||||||||||||
ASSETS | |||||||||||||||||||
Current assets | |||||||||||||||||||
Cash and cash equivalents | $ | 79,037 | $ | — | $ | 89,247 | $ | — | $ | 168,284 | |||||||||
Accounts receivable, net | 117,090 | — | 260,745 | — | 377,835 | ||||||||||||||
Intercompany accounts receivable | 11,599 | — | 8,375 | (19,974 | ) | — | |||||||||||||
Inventories | 111,702 | — | 142,341 | (964 | ) | 253,079 | |||||||||||||
Deferred tax assets current, net | 37,450 | — | 17,695 | — | 55,145 | ||||||||||||||
Other current assets | 25,101 | — | 81,079 | (1,684 | ) | 104,496 | |||||||||||||
Intercompany other | 2,088 | — | — | (2,088 | ) | — | |||||||||||||
Total current assets | 384,067 | — | 599,482 | (24,710 | ) | 958,839 | |||||||||||||
Property, plant, and equipment, net | 116,725 | — | 184,733 | — | 301,458 | ||||||||||||||
Deferred tax assets noncurrent, net | (19,705 | ) | — | 32,419 | — | 12,714 | |||||||||||||
Other long-term assets | 48,220 | — | 20,747 | — | 68,967 | ||||||||||||||
Intangible assets, net | 34,804 | — | 258,126 | — | 292,930 | ||||||||||||||
Goodwill | 184,749 | — | 1,127,022 | — | 1,311,771 | ||||||||||||||
Investment in subsidiaries | 320,053 | — | — | (320,053 | ) | — | |||||||||||||
Intercompany notes receivable | 1,397,260 | 103,085 | — | (1,500,345 | ) | — | |||||||||||||
Total assets | $ | 2,466,173 | $ | 103,085 | $ | 2,222,529 | $ | (1,845,108 | ) | $ | 2,946,679 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||
Current liabilities | |||||||||||||||||||
Accounts payable | $ | 82,347 | $ | — | $ | 186,115 | $ | — | $ | 268,462 | |||||||||
Other current liabilities | 6,648 | — | 34,982 | — | 41,630 | ||||||||||||||
Intercompany accounts payable | 8,375 | — | 11,599 | (19,974 | ) | — | |||||||||||||
Wages and benefits payable | 35,475 | — | 59,380 | — | 94,855 | ||||||||||||||
Taxes payable | 4,537 | — | 23,439 | — | 27,976 | ||||||||||||||
Current portion of debt | 234,449 | — | — | — | 234,449 | ||||||||||||||
Current portion of warranty | 10,737 | — | 19,262 | — | 29,999 | ||||||||||||||
Unearned revenue | 27,779 | — | 21,943 | — | 49,722 | ||||||||||||||
Short-term intercompany advances | — | — | 2,088 | (2,088 | ) | — | |||||||||||||
Total current liabilities | 410,347 | — | 358,808 | (22,062 | ) | 747,093 | |||||||||||||
Long-term debt | 341,121 | — | — | — | 341,121 | ||||||||||||||
Long-term warranty | 11,767 | — | 21,072 | — | 32,839 | ||||||||||||||
Pension plan benefits | — | — | 69,675 | — | 69,675 | ||||||||||||||
Intercompany notes payable | 103,085 | — | 1,397,260 | (1,500,345 | ) | — | |||||||||||||
Deferred tax liabilities noncurrent, net | (44,218 | ) | — | 95,757 | — | 51,539 | |||||||||||||
Other long-term obligations | 26,601 | — | 60,341 | — | 86,942 | ||||||||||||||
Total liabilities | 848,703 | — | 2,002,913 | (1,522,407 | ) | 1,329,209 | |||||||||||||
Shareholders’ equity | |||||||||||||||||||
Preferred stock | — | — | — | — | — | ||||||||||||||
Common stock | 1,339,504 | 97,377 | 101,192 | (198,569 | ) | 1,339,504 | |||||||||||||
Accumulated other comprehensive income (loss), net | 81,390 | (7,787 | ) | 50,861 | (43,074 | ) | 81,390 | ||||||||||||
Retained earnings | 196,576 | 13,495 | 67,563 | (81,058 | ) | 196,576 | |||||||||||||
Total shareholders’ equity | 1,617,470 | 103,085 | 219,616 | (322,701 | ) | 1,617,470 | |||||||||||||
Total liabilities and shareholders’ equity | $ | 2,466,173 | $ | 103,085 | $ | 2,222,529 | $ | (1,845,108 | ) | $ | 2,946,679 |
Parent | Guarantor Subsidiary | Combined Non-guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
(in thousands) | |||||||||||||||||||
ASSETS | |||||||||||||||||||
Current assets | |||||||||||||||||||
Cash and cash equivalents | $ | 19,146 | $ | — | $ | 150,331 | $ | — | $ | 169,477 | |||||||||
Accounts receivable, net | 163,758 | — | 207,904 | — | 371,662 | ||||||||||||||
Intercompany accounts receivable | 10,106 | — | 3,675 | (13,781 | ) | — | |||||||||||||
Inventories | 99,846 | — | 109,208 | (897 | ) | 208,157 | |||||||||||||
Deferred tax assets current, net | 40,344 | — | 15,007 | — | 55,351 | ||||||||||||||
Other current assets | 23,962 | — | 53,608 | — | 77,570 | ||||||||||||||
Intercompany other | 1,997 | — | — | (1,997 | ) | — | |||||||||||||
Total current assets | 359,159 | — | 539,733 | (16,675 | ) | 882,217 | |||||||||||||
Property, plant, and equipment, net | 115,499 | — | 183,743 | — | 299,242 | ||||||||||||||
Deferred tax assets noncurrent, net | 7,684 | — | 27,366 | — | 35,050 | ||||||||||||||
Other long-term assets | 14,134 | — | 14,108 | — | 28,242 | ||||||||||||||
Intangible assets, net | 41,828 | — | 249,842 | — | 291,670 | ||||||||||||||
Goodwill | 184,750 | — | 1,024,626 | — | 1,209,376 | ||||||||||||||
Investment in subsidiaries | 324,104 | — | — | (324,104 | ) | — | |||||||||||||
Intercompany notes receivable | 1,283,139 | 101,418 | — | (1,384,557 | ) | — | |||||||||||||
Total assets | $ | 2,330,297 | $ | 101,418 | $ | 2,039,418 | $ | (1,725,336 | ) | $ | 2,745,797 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||
Current liabilities | |||||||||||||||||||
Accounts payable | $ | 75,027 | $ | — | $ | 166,922 | $ | — | $ | 241,949 | |||||||||
Other current liabilities | 12,223 | — | 37,467 | — | 49,690 | ||||||||||||||
Intercompany accounts payable | 3,675 | — | 10,106 | (13,781 | ) | — | |||||||||||||
Wages and benefits payable | 54,804 | — | 55,675 | — | 110,479 | ||||||||||||||
Taxes payable | 3,368 | — | 16,357 | — | 19,725 | ||||||||||||||
Current portion of debt | 228,721 | — | — | — | 228,721 | ||||||||||||||
Current portion of warranty | 8,813 | — | 16,099 | — | 24,912 | ||||||||||||||
Unearned revenue | 21,926 | — | 6,332 | — | 28,258 | ||||||||||||||
Short-term intercompany advances | — | — | 1,997 | (1,997 | ) | — | |||||||||||||
Total current liabilities | 408,557 | — | 310,955 | (15,778 | ) | 703,734 | |||||||||||||
Long-term debt | 382,220 | — | — | — | 382,220 | ||||||||||||||
Long-term warranty | 13,721 | — | 12,650 | — | 26,371 | ||||||||||||||
Pension plan benefit liability | — | — | 61,450 | — | 61,450 | ||||||||||||||
Intercompany notes payable | 101,418 | — | 1,283,139 | (1,384,557 | ) | — | |||||||||||||
Deferred tax liabilities noncurrent, net | (38,400 | ) | — | 92,812 | — | 54,412 | |||||||||||||
Other long-term obligations | 34,486 | — | 54,829 | — | 89,315 | ||||||||||||||
Total liabilities | 902,002 | — | 1,815,835 | (1,400,335 | ) | 1,317,502 | |||||||||||||
Shareholders’ equity | |||||||||||||||||||
Preferred stock | — | — | — | — | — | ||||||||||||||
Common stock | 1,328,249 | 97,377 | 136,441 | (233,818 | ) | 1,328,249 | |||||||||||||
Accumulated other comprehensive income (loss), net | (34,974 | ) | (7,786 | ) | 41,778 | (33,992 | ) | (34,974 | ) | ||||||||||
Retained earnings | 135,020 | 11,827 | 45,364 | (57,191 | ) | 135,020 | |||||||||||||
Total shareholders’ equity | 1,428,295 | 101,418 | 223,583 | (325,001 | ) | 1,428,295 | |||||||||||||
Total liabilities and shareholders’ equity | $ | 2,330,297 | $ | 101,418 | $ | 2,039,418 | $ | (1,725,336 | ) | $ | 2,745,797 |
Parent | Guarantor Subsidiary | Combined Non-guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
(in thousands) | |||||||||||||||||||
Operating activities | |||||||||||||||||||
Net income | $ | 61,556 | $ | 1,668 | $ | 22,199 | $ | (23,867 | ) | $ | 61,556 | ||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||||||||||
Depreciation and amortization | 22,314 | — | 41,985 | — | 64,299 | ||||||||||||||
Stock-based compensation | 9,518 | — | — | — | 9,518 | ||||||||||||||
Amortization of prepaid debt fees | 2,265 | — | — | — | 2,265 | ||||||||||||||
Amortization of convertible debt discount | 5,336 | — | — | — | 5,336 | ||||||||||||||
Deferred taxes, net | 17,948 | — | (11,867 | ) | — | 6,081 | |||||||||||||
Equity in losses of guarantor and non-guarantor subsidiaries, net | (23,867 | ) | — | — | 23,867 | — | |||||||||||||
Other adjustments, net | (209 | ) | — | 494 | — | 285 | |||||||||||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||||||||||||||
Accounts receivable | 22,209 | — | (34,315 | ) | — | (12,106 | ) | ||||||||||||
Inventories | (11,789 | ) | — | (24,879 | ) | — | (36,668 | ) | |||||||||||
Other current assets | 750 | — | (22,018 | ) | — | (21,268 | ) | ||||||||||||
Other long-term assets | (11,410 | ) | — | (11,583 | ) | — | (22,993 | ) | |||||||||||
Accounts payables, other current liabilities, and taxes payable | 4,585 | — | 11,938 | — | 16,523 | ||||||||||||||
Wages and benefits payable | (19,329 | ) | — | (2,202 | ) | — | (21,531 | ) | |||||||||||
Unearned revenue | 9,875 | — | 14,284 | — | 24,159 | ||||||||||||||
Warranty | (30 | ) | — | 9,540 | — | 9,510 | |||||||||||||
Intercompany transactions, net | 3,207 | — | (3,207 | ) | — | — | |||||||||||||
Other operating, net | (1,159 | ) | — | 3,885 | — | 2,726 | |||||||||||||
Net cash provided by (used in) operating activities | 91,770 | 1,668 | (5,746 | ) | — | 87,692 | |||||||||||||
Investing activities | |||||||||||||||||||
Acquisitions of property, plant, and equipment | (14,579 | ) | — | (14,133 | ) | — | (28,712 | ) | |||||||||||
Business acquisition, net of cash equivalents acquired | — | — | (14,635 | ) | — | (14,635 | ) | ||||||||||||
Current intercompany notes, net | 106 | (1,668 | ) | — | 1,562 | — | |||||||||||||
Other investing, net | 34,541 | — | (34,028 | ) | — | 513 | |||||||||||||
Net cash provided by (used in) investing activities | 20,068 | (1,668 | ) | (62,796 | ) | 1,562 | (42,834 | ) | |||||||||||
Financing activities | |||||||||||||||||||
Payments on debt | (55,630 | ) | — | — | — | (55,630 | ) | ||||||||||||
Issuance of common stock | 2,553 | — | — | — | 2,553 | ||||||||||||||
Current intercompany notes, net | 1,668 | — | (106 | ) | (1,562 | ) | — | ||||||||||||
Other financing, net | (538 | ) | — | 219 | — | (319 | ) | ||||||||||||
Net cash provided by (used in) financing activities | (51,947 | ) | — | 113 | (1,562 | ) | (53,396 | ) | |||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | — | — | 7,345 | — | 7,345 | ||||||||||||||
Increase (decrease) in cash and cash equivalents | 59,891 | — | (61,084 | ) | — | (1,193 | ) | ||||||||||||
Cash and cash equivalents at beginning of period | 19,146 | — | 150,331 | — | 169,477 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 79,037 | $ | — | $ | 89,247 | $ | — | $ | 168,284 | |||||||||
Non-cash transactions: | |||||||||||||||||||
Property, plant, and equipment purchased but not yet paid, net | $ | 2,114 | $ | — | $ | (1,136 | ) | $ | — | $ | 978 | ||||||||
Fair value of contingent and deferred consideration payable for business acquisition | — | — | 5,108 | — | 5,108 | ||||||||||||||
Supplemental disclosure of cash flow information: | |||||||||||||||||||
Cash paid during the period for: | |||||||||||||||||||
Income taxes, net | $ | (1,028 | ) | $ | — | $ | 7,870 | $ | — | $ | 6,842 | ||||||||
Interest, net of amounts capitalized | 15,719 | — | 208 | — | 15,927 |
Parent | Guarantor Subsidiary | Combined Non-guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
(in thousands) | |||||||||||||||||||
Operating activities | |||||||||||||||||||
Net income | $ | 50,561 | $ | 1,534 | $ | 13,015 | $ | (14,549 | ) | $ | 50,561 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 22,655 | — | 42,416 | — | 65,071 | ||||||||||||||
Stock-based compensation | 9,121 | — | — | — | 9,121 | ||||||||||||||
Amortization of prepaid debt fees | 2,762 | — | — | — | 2,762 | ||||||||||||||
Amortization of convertible debt discount | 4,957 | — | — | — | 4,957 | ||||||||||||||
Deferred income taxes, net | 2,639 | — | (10,771 | ) | — | (8,132 | ) | ||||||||||||
Equity in losses of guarantor and non-guarantor subsidiaries, net | (14,549 | ) | — | — | 14,549 | — | |||||||||||||
Other adjustments, net | 1,972 | — | 1,334 | — | 3,306 | ||||||||||||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||||||||||||||
Accounts receivable | (33,080 | ) | — | (19,044 | ) | — | (52,124 | ) | |||||||||||
Inventories | (33,896 | ) | — | (7,034 | ) | — | (40,930 | ) | |||||||||||
Other current assets | 6,504 | — | 1,871 | — | 8,375 | ||||||||||||||
Other long-term assets | 1,215 | — | (1,978 | ) | — | (763 | ) | ||||||||||||
Accounts payables, other current liabilities, and taxes payable | 22,873 | — | 19,590 | — | 42,463 | ||||||||||||||
Wages and benefits payable | 16,928 | — | 2,720 | — | 19,648 | ||||||||||||||
Unearned revenue | (330 | ) | — | 2,695 | — | 2,365 | |||||||||||||
Warranty | 3,692 | — | 10,663 | — | 14,355 | ||||||||||||||
Intercompany transactions, net | 2,784 | — | (2,784 | ) | — | — | |||||||||||||
Other operating, net | 68 | — | (4,017 | ) | — | (3,949 | ) | ||||||||||||
Net cash provided by operating activities | 66,876 | 1,534 | 48,676 | — | 117,086 | ||||||||||||||
Investing activities | |||||||||||||||||||
Acquisitions of property, plant, and equipment | (15,490 | ) | — | (12,226 | ) | — | (27,716 | ) | |||||||||||
Current intercompany notes, net | 27,259 | (1,534 | ) | 5,000 | (30,725 | ) | — | ||||||||||||
Other investing, net | 2,572 | — | 1,923 | — | 4,495 | ||||||||||||||
Net cash provided by (used in) investing activities | 14,341 | (1,534 | ) | (5,303 | ) | (30,725 | ) | (23,221 | ) | ||||||||||
Financing activities | |||||||||||||||||||
Payments on debt | (73,881 | ) | — | — | — | (73,881 | ) | ||||||||||||
Issuance of common stock | 6,812 | — | — | — | 6,812 | ||||||||||||||
Current intercompany notes, net | (3,466 | ) | — | (27,259 | ) | 30,725 | — | ||||||||||||
Other financing, net | (1,340 | ) | — | (897 | ) | — | (2,237 | ) | |||||||||||
Net cash used in financing activities | (71,875 | ) | — | (28,156 | ) | 30,725 | (69,306 | ) | |||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | — | — | (9,081 | ) | — | (9,081 | ) | ||||||||||||
Increase in cash and cash equivalents | 9,342 | — | 6,136 | — | 15,478 | ||||||||||||||
Cash and cash equivalents at beginning of period | 16,385 | — | 105,508 | — | 121,893 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 25,727 | $ | — | $ | 111,644 | $ | — | $ | 137,371 | |||||||||
Non-cash transactions: | |||||||||||||||||||
Property, plant, and equipment purchased but not yet paid, net | $ | (245 | ) | $ | — | $ | (3,246 | ) | $ | — | $ | (3,491 | ) | ||||||
Supplemental disclosure of cash flow information: | |||||||||||||||||||
Cash paid during the period for: | |||||||||||||||||||
Income taxes, net | $ | 9,191 | $ | — | $ | 164 | $ | — | $ | 9,355 | |||||||||
Interest, net of amounts capitalized | 20,958 | — | 220 | — | 21,178 |
ITEM 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||
Revenues | $ | 612,401 | $ | 567,339 | 8% | $ | 1,176,092 | $ | 1,064,962 | 10% | |||||||||
Gross Profit | $ | 191,083 | $ | 174,056 | 10% | $ | 375,193 | $ | 331,120 | 13% | |||||||||
Gross Margin | 31.2 | % | 30.7 | % | 31.9 | % | 31.1 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Revenues by region | |||||||||||||||
United States and Canada | $ | 285,931 | $ | 299,502 | $ | 560,393 | $ | 538,502 | |||||||
Europe | 228,354 | 192,864 | 431,185 | 388,348 | |||||||||||
Other | 98,116 | 74,973 | 184,514 | 138,112 | |||||||||||
Total revenues | $ | 612,401 | $ | 567,339 | $ | 1,176,092 | $ | 1,064,962 |
• | Standard metering – no built-in remote reading communication capability |
• | Advanced metering – one-way communication of meter data |
• | Smart metering – two-way communication including remote meter configuration and upgrade (consisting primarily of our OpenWay® technology) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||
(units in thousands) | |||||||||||
Total meters (standard, advanced, and smart) | |||||||||||
Itron North America | |||||||||||
Electricity | 1,570 | 1,740 | 3,090 | 3,190 | |||||||
Gas | 140 | 160 | 280 | 260 | |||||||
Itron International | |||||||||||
Electricity | 1,870 | 1,930 | 3,490 | 3,570 | |||||||
Gas | 1,110 | 1,020 | 2,050 | 2,000 | |||||||
Water | 2,420 | 2,380 | 4,960 | 4,670 | |||||||
Total meters | 7,110 | 7,230 | 13,870 | 13,690 | |||||||
Additional meter information (Total Company) | |||||||||||
Advanced meters | 1,130 | 1,050 | 2,030 | 1,720 | |||||||
Smart meters | 910 | 1,050 | 1,900 | 1,860 | |||||||
Standalone advanced and smart communication modules | 1,850 | 1,600 | 3,280 | 2,790 | |||||||
Advanced and smart meters and communication modules | 3,890 | 3,700 | 7,210 | 6,370 | |||||||
Meters with other vendors’ advanced or smart communication technology | 120 | 70 | 230 | 260 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||||||||||
Segment Revenues | (in thousands) | (in thousands) | |||||||||||||||||||||||||
Itron North America | $ | 288,224 | $ | 301,143 | (4)% | $ | 565,206 | $ | 542,702 | 4% | |||||||||||||||||
Itron International | 324,177 | 266,196 | 22% | 610,886 | 522,260 | 17% | |||||||||||||||||||||
Total revenues | $ | 612,401 | $ | 567,339 | 8% | $ | 1,176,092 | $ | 1,064,962 | 10% | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||||||||||||||
Gross Profit | Gross Margin | Gross Profit | Gross Margin | Gross Profit | Gross Margin | Gross Profit | Gross Margin | ||||||||||||||||||||
Segment Gross Profit and Margin | (in thousands) | (in thousands) | (in thousands) | (in thousands) | |||||||||||||||||||||||
Itron North America | $ | 96,958 | 33.6% | $ | 100,972 | 33.5% | $ | 191,680 | 33.9% | $ | 179,131 | 33.0% | |||||||||||||||
Itron International | 94,125 | 29.0% | 73,084 | 27.5% | 183,513 | 30.0% | 151,989 | 29.1% | |||||||||||||||||||
Total gross profit and margin | $ | 191,083 | 31.2% | $ | 174,056 | 30.7% | $ | 375,193 | 31.9% | $ | 331,120 | 31.1% | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||||||||||||||
Operating Income (Loss) | Operating Margin | Operating Income (Loss) | Operating Margin | Operating Income (Loss) | Operating Margin | Operating Income (Loss) | Operating Margin | ||||||||||||||||||||
Segment Operating Income (Loss) and Operating Margin | (in thousands) | (in thousands) | (in thousands) | (in thousands) | |||||||||||||||||||||||
Itron North America | $ | 42,739 | 15% | $ | 55,384 | 18% | $ | 86,532 | 15% | $ | 87,420 | 16% | |||||||||||||||
Itron International | 16,483 | 5% | 5,017 | 2% | 32,711 | 5% | 15,454 | 3% | |||||||||||||||||||
Corporate unallocated | (11,137 | ) | (10,392 | ) | (21,069 | ) | (21,246 | ) | |||||||||||||||||||
Total Company | $ | 48,085 | 8% | $ | 50,009 | 9% | $ | 98,174 | 8% | $ | 81,628 | 8% |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Electricity | $ | 117,549 | $ | 104,066 | $ | 215,235 | $ | 199,727 | |||||||
Water | 106,709 | 81,564 | 213,196 | 173,881 | |||||||||||
Gas | 99,919 | 80,566 | 182,455 | 148,652 | |||||||||||
Itron International revenues | $ | 324,177 | $ | 266,196 | $ | 610,886 | $ | 522,260 |
• | Electricity margins were favorably impacted by lower warranty expense, and unfavorably impacted primarily by lower service margin associated with implementation of complex systems. The second quarter of 2010 included $9.6 million of warranty expense associated with claims in Sweden. |
• | Gas margins increased due to a favorable product mix of higher margin Commercial and Industrial (C&I) products. |
• | Water margins decreased primarily due to higher material costs, including brass. |
• | Electricity margins were impacted favorably by lower warranty expense. Warranty expense in 2011 included an $8.6 million recovery from a third party associated with claims in Sweden and a $7.7 million charge related to certain products in Brazil. The second quarter of 2010 included $9.6 million of warranty expense associated with claims in Sweden. |
• | Gas margins increased due to a favorable product mix of higher margin C&I products. |
• | Water margins decreased primarily due to higher material costs, including brass. |
Quarter Ended | Quarterly Bookings | Ending Total Backlog | Ending 12-Month Backlog | |||||||||
(in millions) | ||||||||||||
June 30, 2011 | $ | 483 | $ | 1,622 | $ | 1,049 | ||||||
March 31, 2011 | 681 | 1,747 | 989 | |||||||||
December 31, 2010 | 581 | 1,620 | 913 | |||||||||
September 30, 2010 | 528 | 1,663 | 958 | |||||||||
June 30, 2010 | 806 | 1,691 | 1,017 |
Quarter Ended | Total Bookings | Itron North America | Itron International | |||||||||
(in millions) | ||||||||||||
June 30, 2011 | $ | 483 | $ | 148 | $ | 335 | ||||||
March 31, 2011 | 681 | 379 | 302 | |||||||||
December 31, 2010 | 581 | 301 | 280 | |||||||||
September 30, 2010 | 528 | 272 | 256 | |||||||||
June 30, 2010 | 806 | 517 | 289 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2011 | % of Revenues | 2010 | % of Revenues | 2011 | % of Revenues | 2010 | % of Revenues | ||||||||||||||||
(in thousands) | (in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||||
Sales and marketing | $ | 48,845 | 8% | $ | 40,974 | 7% | $ | 93,493 | 8% | $ | 82,511 | 8% | |||||||||||
Product development | 40,931 | 7% | 33,022 | 6% | 81,376 | 7% | 66,062 | 6% | |||||||||||||||
General and administrative | 35,118 | 6% | 33,285 | 6% | 68,449 | 6% | 66,342 | 6% | |||||||||||||||
Amortization of intangible assets | 16,197 | 3% | 16,766 | 3% | 31,794 | 3% | 34,577 | 3% | |||||||||||||||
Restructuring | 1,907 | —% | — | —% | 1,907 | —% | — | —% | |||||||||||||||
Total operating expenses | $ | 142,998 | 23% | $ | 124,047 | 22% | $ | 277,019 | 24% | $ | 249,492 | 23% |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Interest income | $ | 168 | $ | 111 | $ | 476 | $ | 278 | |||||||
Interest expense | (10,460 | ) | (12,455 | ) | (21,269 | ) | (26,126 | ) | |||||||
Amortization of prepaid debt fees | (960 | ) | (1,510 | ) | (2,265 | ) | (2,762 | ) | |||||||
Other income (expense), net | (2,477 | ) | (425 | ) | (4,073 | ) | (1,017 | ) | |||||||
Total other income (expense) | $ | (13,729 | ) | $ | (14,279 | ) | $ | (27,131 | ) | $ | (29,627 | ) |
Six Months Ended June 30, | |||||||
2011 | 2010 | ||||||
(in thousands) | |||||||
Operating activities | $ | 87,692 | $ | 117,086 | |||
Investing activities | (42,834 | ) | (23,221 | ) | |||
Financing activities | (53,396 | ) | (69,306 | ) | |||
Effect of exchange rates on cash and cash equivalents | 7,345 | (9,081 | ) | ||||
Increase (decrease) in cash and cash equivalents | $ | (1,193 | ) | $ | 15,478 |
October 1, 2010 | |||||
Goodwill | Fair Value Exceeded Carrying Value | ||||
(in thousands) | |||||
Itron North America | $ | 197,645 | 229% | ||
Itron International - Electricity | 347,299 | 14% | |||
Itron International - Water | 383,194 | 29% | |||
Itron International - Gas | 308,445 | 55% | |||
$ | 1,236,583 |
Item 3: | Quantitative and Qualitative Disclosures about Market Risk |
2011 | 2012 | 2013 | 2014 | Total | |||||||||||||||
(in thousands) | |||||||||||||||||||
Fixed Rate Debt | |||||||||||||||||||
Principal: Convertible notes(1) | $ | 223,604 | $ | — | $ | — | $ | — | $ | 223,604 | |||||||||
Interest rate | 2.50 | % | |||||||||||||||||
Variable Rate Debt | |||||||||||||||||||
Principal: U.S. dollar term loan | $ | 3,025 | $ | 6,051 | $ | 6,051 | $ | 185,489 | $ | 200,616 | |||||||||
Average interest rate | 3.75 | % | 4.04 | % | 4.93 | % | 5.93 | % | |||||||||||
Principal: Euro term loan | $ | 2,397 | $ | 4,794 | $ | 4,794 | $ | 139,365 | $ | 151,350 | |||||||||
Average interest rate | 4.86 | % | 5.42 | % | 5.86 | % | 6.59 | % | |||||||||||
Interest rate swap on euro term loan(2) | |||||||||||||||||||
Average interest rate (Pay) | 6.59 | % | 6.59 | % | |||||||||||||||
Average interest rate (Receive) | 3.61 | % | 3.90 | % | |||||||||||||||
Net/Spread | (2.98 | )% | (2.69 | )% |
(1) | Our convertible notes mature in August 2026, however due to the combination of put, call, and conversion options in 2011, the notes are classified as current, (refer to Item 1: “Financial Statements, Note 6: Debt”). |
(2) | The amortizing euro denominated interest rate swap is used to convert $115.6 million (€80.8 million) of our $151.4 million (€105.8 million) euro denominated variable rate term loan from a floating Euro Interbank Offered Rate (EURIBOR), plus the applicable margin, to a fixed interest rate of 6.59%, through December 31, 2012, plus or minus the variance in the applicable margin from 2%. As a result of the amortization schedule, the interest rate swap will terminate before the stated maturity of the term loan (Refer to Item 1: “Financial Statements, Note 7: Derivative Financial Instruments and Hedging Activities”). |
Item 4: | Controls and Procedures |
(a) | Evaluation of disclosure controls and procedures. At June 30, 2011, an evaluation was performed under the supervision and with the participation of our Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e)) under the Securities Exchange Act of 1934, as amended. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that as of June 30, 2011, the Company’s disclosure controls and procedures were effective to ensure the information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. |
(b) | Changes in internal controls over financial reporting. There have been no changes in internal control over financial reporting during the quarter ended June 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. |
Item 1: | Legal Proceedings |
Item 1A: | Risk Factors |
Item 5: | Other Information |
Item 6: | Exhibits |
Exhibit Number | Description of Exhibits | |
12.1 | Statement re Computation of Ratios | |
31.1 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase |
* | Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability. |
ITRON, INC. | |||
August 1, 2011 | By: | /s/ STEVEN M. HELMBRECHT | |
Date | Steven M. Helmbrecht | ||
Sr. Vice President and Chief Financial Officer |
Six Months Ended June 30, 2011 | Year Ended December 31, | ||||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 (5) | |||||||||||||||||||||
(in thousands, except ratios) | |||||||||||||||||||||||||
Earnings: | |||||||||||||||||||||||||
Pre-tax income (loss) | 71,043 | $ | 120,744 | $ | (46,074 | ) | $ | 18,582 | $ | (43,550 | ) | $ | 52,235 | ||||||||||||
Less: income from equity investees | 108 | 614 | 277 | 93 | 358 | 33 | |||||||||||||||||||
70,935 | 120,130 | (46,351 | ) | 18,489 | (43,908 | ) | 52,202 | ||||||||||||||||||
Fixed charges (1): | |||||||||||||||||||||||||
Interest expense, gross (2) | 23,534 | 54,904 | 70,311 | 94,177 | 100,935 | 17,785 | |||||||||||||||||||
Interest portion of rent expense | 3,445 | 5,125 | 5,241 | 5,163 | 4,098 | 2,241 | |||||||||||||||||||
a) Fixed charges | 26,979 | 60,029 | 75,552 | 99,340 | 105,033 | 20,026 | |||||||||||||||||||
b) Earnings for ratio (3) | $ | 97,914 | $ | 180,159 | $ | 29,201 | $ | 117,829 | $ | 61,125 | $ | 72,228 | |||||||||||||
Ratios: | |||||||||||||||||||||||||
Earnings to fixed charges (b/a) | 3.6 | 3.0 | — (4) | 1.2 | — (4) | 3.6 | |||||||||||||||||||
Deficit of earnings to fixed charges | $ | — | $ | — | $ | (46,351 | ) | $ | — | $ | (43,908 | ) | $ | — |
(1) | Fixed charges consist of interest on indebtedness and amortization of debt issuance costs plus that portion of lease rental expense representative of the interest factor. |
(2) | Interest expense, gross, includes amortization of prepaid debt fees and discount. |
(3) | Earnings for ratio consist of income (loss) from continuing operations before income taxes, less income (loss) from equity investees, plus fixed charges. |
(4) | Due to Itron's losses for the years ended December 31, 2009 and 2007, the coverage ratio was less than 1:1. Additional earnings of $46,351 and $43,908 would have been needed to achieve a coverage ratio of 1:1 in each of those respective periods. |
(5) | On January 1, 2009, we adopted Financial Accounting Standards Board (FASB) Staff Position (FSP) APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (FSP 14-1) relating to our convertible senior subordinate notes issued in August 2006. (The guidance in FSP 14-1 is now embedded within Accounting Standards CodificationTM (ASC) 470-20). We used the SEC staff's Alternative A transition election for presenting prior financial information, and therefore the financial information as of and for the year ended December 31, 2006 has not been adjusted and is not comparable to the financial information as of and for the years ended December 31, 2010, 2009, 2008, and 2007. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Itron, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and |
b) | Any fraud, whether or not material that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
ITRON, INC. | |||
By: | /s/ MALCOLM UNSWORTH | ||
Malcolm Unsworth President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Itron, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and |
b) | Any fraud, whether or not material that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
ITRON, INC. | |||
By: | /s/ STEVEN M. HELMBRECHT | ||
Steven M. Helmbrecht Sr. Vice President and Chief Financial Officer |
/s/ MALCOLM UNSWORTH |
Malcolm Unsworth President and Chief Executive Officer |
August 1, 2011 |
/s/ STEVEN M. HELMBRECHT |
Steven M. Helmbrecht Sr. Vice President and Chief Financial Officer |
August 1, 2011 |
Income Taxes Accrued Interest and Penalties, Unrecognized Tax Benefits (Details) (USD $)
In Thousands |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Income Tax Contingency [Line Items] | ||
Accrued interest | $ 4,766 | $ 4,403 |
Accrued penalties | 3,574 | 3,233 |
Unrecognized tax benefits related to uncertain tax positions | 29,162 | 42,175 |
The amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate | $ 29,089 | $ 30,832 |
Certain Balance Sheet Components Accounts Receivable, Net Additional Information (Details) (USD $)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Long term Retainage Contract Receivables [Line Items] | ||
Unbilled Contracts Receivable | $ 4,500,000 | $ 2,100,000 |
Long-term unbilled receivables and long-term retainage contract receivables | 36,500,000 | 5,900,000 |
Reclassified from current accounts receivables to other long-term assets [Member]
|
||
Long term Retainage Contract Receivables [Line Items] | ||
Unbilled Contracts Receivable | 12,000,000 | |
Reclassified from current accounts receivables to other long-term assets [Member] | Long Term Retainage Contract Receivables [Member]
|
||
Long term Retainage Contract Receivables [Line Items] | ||
Contract Receivable Retainage, Due after One Year | 12,500,000 | |
Long Term Retainage Contract Receivables [Member]
|
||
Long term Retainage Contract Receivables [Line Items] | ||
Contract Receivable Retainage, Due One Year or Less | $ 134,000 | $ 12,491,000 |
Defined Benefit Pension Plans Schedule of Amounts Recognized in the Consolidated Balance Sheets (Details) (USD $)
In Thousands |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Schedule of Amounts Recognized in the Consolidated Balance Sheets [Line Items] | ||
Plan Assets in Other Long Term Assets | $ (468) | $ (412) |
Current Portion of Pension Plan Liability in Wages and Benefits Payable | 2,910 | 2,656 |
Long-term portion of pension plan liability | 69,675 | 61,450 |
Net Penison Plan Benefit Liability | $ 72,117 | $ 63,694 |
Certain Balance Sheet Components Consigned Inventory (Details) (USD $)
In Millions |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Consigned inventory [Line Items] | ||
Consigned Inventory | $ 15.1 | $ 17.6 |
Commitments and Contingencies Commitments and Contingencies Narrative (Details) (USD $)
In Millions, except Per Share data |
3 Months Ended | 9 Months Ended | 6 Months Ended | |
---|---|---|---|---|
Jun. 30, 2011
|
Sep. 30, 2010
|
Jun. 30, 2011
Itron International [Member]
|
Jun. 30, 2010
Itron International [Member]
|
|
Reduction in YTD Q3 2010 revenue due to restatement | $ 6.1 | |||
Impact of Restatement on Earnings Per Share, Diluted | $ 0.11 | |||
Recovery Associated With Settlement Of Product Claims | 8.6 | |||
Warranty Charge | 7.7 | 9.6 | ||
Severance Costs | $ 1.9 |
Commitments and Contingencies Health Benefit Plan Costs (Details) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Plan Costs | $ 5,927 | $ 4,316 | $ 12,671 | $ 9,402 |
Earnings Per Share and Capital Structure Earnings Per Share and Capital Structure (Tables)
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Computation of Basic and Diluted Earnings Per Share [Table Text Block] | The following table sets forth the computation of basic and diluted earnings per share (EPS):
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Stock-Based Compensation Employee Stock Purchase Plan (Details) (Employee Stock [Member], USD $)
|
3 Months Ended | 6 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Employee Stock [Member]
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[Line Items] | ||||||||||||
Shares of stock sold to employees | 25,567 | [1] | 10,736 | [1] | 42,625 | [1] | 23,086 | [1] | ||||
Weighted average fair value per ESPP award | $ 7.22 | [2] | $ 9.27 | [2] | $ 7.88 | [2] | $ 9.95 | [2] | ||||
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6 Months Ended |
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Jun. 30, 2011
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Document and Entity Information [Line Items] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Jun. 30, 2011 |
Entity Registrant Name | ITRON INC /WA/ |
Entity Central Index Key | 0000780571 |
Document Fiscal Year Focus | 2011 |
Document Fiscal Period Focus | Q2 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 40,696,130 |
Trading Symbol | ITRI |
Earnings Per Share and Capital Structure Preferred Stock (Details) (USD $)
|
Jun. 30, 2011
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Dec. 31, 2010
|
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Class of Stock [Line Items] | ||
Preferred Stock, Shares Authorized | 10,000,000 | |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Preferred Stock, No Par Value | $ 0 | $ 0 |
Goodwill Schedule of Goodwill Allocated to Reporting Segments (Tables)
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Schedule of Goodwill [Table Text Block] | The following table reflects goodwill allocated to each reporting segment at June 30, 2011 and 2010:
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Earnings Per Share and Capital Structure Stock-based Awards (Details)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
|
Jun. 30, 2011
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Jun. 30, 2010
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Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Stock-based awards excluded from diluted EPS calculation (antidilutive) | 672,000 | 664,000 | 308,000 | 385,000 |
Stock-Based Compensation Stock Option Summary (Details) (Employee Stock Option [Member], USD $)
In Thousands, except Per Share data, unless otherwise specified |
6 Months Ended | |||||
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Jun. 30, 2011
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Jun. 30, 2010
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Employee Stock Option [Member]
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[Line Items] | ||||||
Outstanding, beginning balance, Number | 1,102 | 1,179 | ||||
Outstanding, beginning balance, Weighted Average Exercise Price Per Share | $ 55.21 | $ 52.93 | ||||
Outstanding, beginning balance, Weighted Average Remaining Contractual Term | 5.58 | 5.90 | ||||
Outstanding, beginning balance, Aggregate Intrinsic Value | $ 10,883 | [1] | $ 22,863 | [1] | ||
Granted, Number | 78 | 71 | ||||
Granted, Weighted Average Exercise Price Per Share | $ 56.64 | $ 61.97 | ||||
Granted, Weighted Average Grant Date Fair Value | $ 23.93 | $ 27.18 | ||||
Exercised, Number | (26) | (133) | ||||
Exercised, Weighted Average Exercise Price Per Share | $ 19.91 | $ 41.51 | ||||
Exercised, Aggregate Intrinsic Value | 989 | [1] | 4,114 | [1] | ||
Expired, Number | (1) | |||||
Expired, Weighted Average Exercise Price Per Share | $ 7.00 | |||||
Outstanding, ending balance, Number | 1,153 | 1,117 | ||||
Outstanding, ending balance, Weighted Average Exercise Price Per Share | $ 56.13 | $ 54.89 | ||||
Outstanding, ending balance, Weighted Average Remaining Contractual Term | 5.48 | 6.04 | ||||
Outstanding, ending balance, Aggregate Intrinsic Value | 5,903 | [1] | 15,391 | [1] | ||
Vested and Expected to Vest, Number | 1,145 | 1,104 | ||||
Vested and Expected to Vest, Weighted Average Exercise Price Per Share | $ 56.12 | $ 54.73 | ||||
Vested and Expected to Vest, Weighted Average Remaining Contractual Term | 5.45 | 6.01 | ||||
Vested and Expected to Vest, Aggregate Intrinsic Value | 5,903 | [1] | 15,379 | [1] | ||
Exercisable, Number | 1,029 | 963 | ||||
Exercisable, Weighted Average Exercise Price Per Share | $ 55.85 | $ 52.03 | ||||
Exercisable, Weighted Average Remaining Contractual Term | 5.05 | 5.61 | ||||
Exercisable, Aggregate Intrinsic Value | $ 5,903 | [1] | $ 15,241 | [1] | ||
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General Discussion of Pension and Other Postretirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Pension Plans [Text Block] | Defined Benefit Pension Plans We sponsor both funded and unfunded defined benefit pension plans for our international employees, primarily in Germany, France, Italy, Indonesia, and Spain, offering death and disability, retirement, and special termination benefits. The defined benefit obligation is calculated annually by using the projected unit credit method. The measurement date for the pension plans was December 31, 2010. Our defined benefit pension plans are denominated in the functional currencies of the respective countries in which the plans are sponsored; therefore, the balances increase or decrease, with a corresponding change in OCI, due to changes in foreign currency exchange rates. Amounts recognized on the Consolidated Balance Sheets consist of:
Our asset investment strategy focuses on maintaining a portfolio using primarily insurance funds, which are accounted for as investments and measured at fair value, in order to achieve our long-term investment objectives on a risk adjusted basis. Our general funding policy for these qualified pension plans is to contribute amounts sufficient to satisfy regulatory funding standards of the respective countries for each plan. We contributed $37,000 and $391,000 to the defined benefit pension plans for the three and six months ended June 30, 2011, and $313,000 and $338,000 for the three and six months ended June 30, 2010, respectively. The timing of when contributions are made can vary by plan and from year to year. For 2011, assuming that actual plan asset returns are consistent with our expected rate of return, and that interest rates remain constant, we expect to contribute approximately $500,000 to our defined benefit pension plans. We contributed $519,000 to the defined benefit pension plans for the year ended December 31, 2010. Net periodic pension benefit costs for our plans include the following components:
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Debt Debt (Tables)
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Jun. 30, 2011
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt [Table Text Block] | The components of our borrowings are as follows:
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Carrying Amounts of Debt and Equity Component [Table Text Block] | The carrying amounts of the debt and equity components are as follows:
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Schedule of Interest Expense On Liability Components [Table Text Block] | The interest expense relating to both the contractual interest coupon and amortization of the discount on the liability component are as follows:
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Summary of Significant Accounting Policies Consolidated Balance Sheet Restatement (Details) (USD $)
In Thousands |
Jun. 30, 2011
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Dec. 31, 2010
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Jun. 30, 2010
As previously reported [Member]
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Jun. 30, 2010
As restated [Member]
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Accounts receivable, net | $ 377,835 | $ 371,662 | $ 366,476 | $ 366,240 |
Deferred tax assets noncurrent, net | 12,714 | 35,050 | 67,684 | 68,657 |
Long-term warranty | 32,839 | 26,371 | 22,953 | 23,274 |
Other long-term obligations | 86,942 | 89,315 | 67,908 | 71,478 |
Accumulated other comprehensive loss, net | (81,390) | 34,974 | (116,019) | (116,047) |
Retained earnings | $ 196,576 | $ 135,020 | $ 83,937 | $ 80,811 |
Summary of Significant Accounting Policies Property, Plant, and Equipment Policy Additional Information (Details) (USD $)
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6 Months Ended | |||
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Jun. 30, 2011
Building and Building Improvements [Member]
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Jun. 30, 2011
Machinery and equipment, computers and purchased software, and furniture [Member]
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Jun. 30, 2011
Assets Held-for-sale [Member]
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Dec. 31, 2010
Assets Held-for-sale [Member]
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Property, Plant and Equipment [Line Items] | ||||
Property, Plant and Equipment, Useful Life, Average | 30 | |||
Property, Plant and Equipment, Useful Life, Minimum | 3 | |||
Property, Plant and Equipment, Useful Life, Maximum | 10 | |||
Assets Held-for-sale, at Carrying Value | $ 0 | $ 0 |
Segment Information Revenues By Region (Details) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Revenues from External Customers [Line Items] | ||||
Revenues | $ 612,401 | $ 567,339 | $ 1,176,092 | $ 1,064,962 |
United States and Canada (Member)
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Revenues from External Customers [Line Items] | ||||
Revenues | 285,931 | 299,502 | 560,393 | 538,502 |
Europe (Member)
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Revenues from External Customers [Line Items] | ||||
Revenues | 228,354 | 192,864 | 431,185 | 388,348 |
Other Countries [Member]
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Revenues from External Customers [Line Items] | ||||
Revenues | $ 98,116 | $ 74,973 | $ 184,514 | $ 138,112 |
Intangible Assets Schedule of Intangilbe Assets (Tables)
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Jun. 30, 2011
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Finite-Lived Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets by Major Class [Table Text Block] | The gross carrying amount and accumulated amortization of our intangible assets, other than goodwill, are as follows:
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Summary of Intangible Asset Account Activity [Table Text Block] | A summary of the intangible asset account activity is as follows:
Intangible assets that were written-off had been fully amortized and were no longer in use. |
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Schedule of Intangible Assets, Future Amortization Expense [Table Text Block] | Estimated future annual amortization expense is as follows:
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Fair Values of Financial Instruments (Text Block)
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Jun. 30, 2011
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Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Values of Financial Instruments [Text Block] | Fair Values of Financial Instruments The fair values at June 30, 2011 and December 31, 2010 do not reflect subsequent changes in the economy, interest rates, tax rates, and other variables that may affect the determination of fair value.
The following methods and assumptions were used in estimating fair values: Cash and cash equivalents: Due to the liquid nature of these instruments, the carrying value approximates fair value. Term loans: The term loans are not registered with the SEC but are generally transferable through banks that hold the debt and make a market. The fair value is based on quoted prices from recent trades of the term loans. Convertible senior subordinated notes: The convertible notes are registered with the SEC and are generally transferable. The fair value is based on quoted prices from recent broker trades of the convertible notes. At June 30, 2011, the discount on the liability component was fully amortized. See Note 6 for further discussion. Derivatives: See Note 7 for a description of our methods and assumptions in determining the fair value of our derivatives, which were determined using fair value measurements of significant other observable inputs (Level 2). |
Intangible Assets (Text Block)
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Jun. 30, 2011
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Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets [Text Block] | Intangible Assets The gross carrying amount and accumulated amortization of our intangible assets, other than goodwill, are as follows:
A summary of the intangible asset account activity is as follows:
Intangible assets that were written-off had been fully amortized and were no longer in use. Intangible assets of our international subsidiaries are recorded in their respective functional currency; therefore, the carrying amounts of intangible assets increase or decrease, with a corresponding change in accumulated OCI, due to changes in foreign currency exchange rates. Estimated future annual amortization expense is as follows:
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Segment Information Segment Information (Tables)
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Jun. 30, 2011
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Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues Gross Profit And Operating Income By Segment [Table Text Block] | Revenues, gross profit, and operating income associated with our segments were as follows:
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Revenues By Region [Table Text Block] | Revenues by region were as follows:
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Depreciation And Amortization Expense Associated With Segments [Table Text Block] | Depreciation and amortization expense associated with our segments was as follows:
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Income Taxes (Text Block)
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Jun. 30, 2011
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes [Text Block] | Income Taxes Our tax provisions (benefits) as a percentage of income (loss) before tax typically differs from the federal statutory rate of 35%, and may vary from period to period, due to fluctuations in the forecasted mix of earnings in domestic and international jurisdictions, new or revised tax legislation and accounting pronouncements, tax credits, state income taxes, adjustments to valuation allowances, and interest expense and penalties related to uncertain tax positions, among other items. For the three and six months ended June 30, 2011, we had tax provision (benefit) of (0.2)% and 13%, based on a percentage of income before tax, as compared with tax provisions of 29% and 3% for the same periods in 2010. Our tax provision in 2011 is lower than the federal statutory rate due to projected earnings in tax jurisdictions with rates lower than 35%, the benefit of certain interest expense deductions, a benefit related to the settlement of a foreign tax litigation, and an election under U.S. Internal Revenue Code Sections 338 with respect to a foreign acquisition in 2007. Our tax provisions in 2010 were the result of certain interest expense deductions and the election under U.S. Internal Revenue Code Section 338 with respect to a foreign acquisition in 2007, as well as the estimated mix of earnings in different tax jurisdictions. The 2010 tax provisions also reflect the receipt of a clean energy manufacturing tax credit awarded as part of the American Recovery and Reinvestment Act and a benefit related to the reduction of tax reserves for certain foreign subsidiaries. We classify interest expense and penalties related to unrecognized tax liabilities and interest income on tax overpayments as components of income tax expense. The net interest and penalties expense (benefit) recognized is as follows:
Accrued interest and penalties recorded are as follows:
Unrecognized tax benefits related to uncertain tax positions and the amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate are as follows:
At June 30, 2011, we are not able to reasonably estimate the timing of future cash flows relating to our uncertain tax positions. We believe it is reasonably possible that our unrecognized tax benefits may decrease by approximately $4.4 million within the next twelve months due to the expiration of statute of limitations. |
Consolidating Financial Information (Text Block)
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Consolidating Financial Information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidating Financial Information [Text Block] | Consolidating Financial Information Our convertible notes, issued by Itron, Inc., are guaranteed by one U.S. subsidiary, which is 100% owned. The guaranty by our U.S. subsidiary is joint and several, full, complete, and unconditional. There are currently no restrictions on the ability of the subsidiary guarantor to transfer funds to the parent company. Consolidating Statement of Operations Three Months Ended June 30, 2011
Consolidating Statement of Operations Three Months Ended June 30, 2010
Consolidating Statement of Operations Six Months Ended June 30, 2011
Consolidating Statement of Operations Six Months Ended June 30, 2010
Consolidating Balance Sheet June 30, 2011
Consolidating Balance Sheet December 31, 2010
Consolidating Statement of Cash Flows Six Months Ended June 30, 2011
Consolidating Statement of Cash Flows Six Months Ended June 30, 2010
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Defined Benefit Pension Plans Defined Benefit Pension Plan Additional Information (Details) (USD $)
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Jun. 30, 2011
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Jun. 30, 2010
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Dec. 31, 2010
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Defined Benefit Plan Disclosure [Line Items] | |||||
Defined Benefit Plan, Contributions by Employer | $ 37,000 | $ 313,000 | $ 391,000 | $ 338,000 | $ 519,000 |
Estimated Future Employer Contributions in Current Fiscal Year | $ 500,000 | $ 500,000 |
Commitments and Contingencies (Text Block)
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Commitments and Contingencies [Text Block] | Commitments and Contingencies Guarantees and Indemnifications We are often required to obtain standby letters of credit (LOC’s) or bonds in support of our obligations for customer contracts. These standby LOC’s or bonds typically provide a guarantee to the customer for future performance, which usually covers the installation phase of a contract and may on occasion cover the operations and maintenance phase of outsourcing contracts. Our available lines of credit, outstanding standby LOC’s, and bonds are as follows:
In the event any such standby LOC or bond is called, we would be obligated to reimburse the issuer of the standby LOC or bond; however, we do not believe that any outstanding LOC or bond will be called. We generally provide an indemnification related to the infringement of any patent, copyright, trademark, or other intellectual property right on software or equipment within our sales contracts, which indemnifies the customer from and pays the resulting costs, damages, and attorney’s fees awarded against a customer with respect to such a claim provided that (a) the customer promptly notifies us in writing of the claim and (b) we have the sole control of the defense and all related settlement negotiations. We also provide an indemnification to our customers for third party claims resulting from damages caused by the negligence or willful misconduct of our employees/agents in connection with the performance of certain contracts. The terms of our indemnifications generally do not limit the maximum potential payments. It is not possible to predict the maximum potential amount of future payments under these or similar agreements. Legal Matters We are subject to various legal proceedings and claims of which the outcomes are subject to significant uncertainty. Our policy is to assess the likelihood of any adverse judgments or outcomes related to legal matters, as well as ranges of probable losses. A determination of the amount of the liability required, if any, for these contingencies is made after an analysis of each known issue. A liability is recorded and charged to operating expense when we determine that a loss is probable and the amount can be reasonably estimated. Additionally, we disclose contingencies for which a material loss is reasonably possible, but not probable. Liabilities recorded for legal contingencies at June 30, 2011 were not material to our financial condition or results of operations. In October, 2010, Transdata Incorporated (Transdata) filed a complaint in the U.S. District Court for the Eastern District of Texas against CenterPoint Energy, one of our customers, and several other utilities alleging infringement of three patents owned by Transdata related to the use of an antenna in a meter. Pursuant to our contract with CenterPoint, we agreed to indemnify and defend CenterPoint in this lawsuit. The complaint seeks unspecified damages as well as injunctive relief. CenterPoint has denied all of the allegations. We believe these claims are without merit and we intend to vigorously defend our interests. We do not believe this matter will have a material adverse effect on our business or financial condition, although an unfavorable outcome could have a material adverse effect on our results of operations for the period in which such a loss is recognized. On February 23, 2011, a class action lawsuit was filed in U.S. Federal Court for the Eastern District of Washington alleging a violation of federal securities laws relating to a restatement of our financial results for the quarters ended March 31, June 30, and September 30, 2010. These revisions were made primarily to defer revenue that had been incorrectly recognized on one contract due to a misinterpretation of an extended warranty obligation. The effect was to reduce revenue and earnings in each of the first three quarters of the year. For the first nine months of 2010, total revenue was reduced by $6.1 million and diluted EPS was reduced by $0.11. We believe the facts and legal claims alleged are without merit and we intend to vigorously defend our interests. In March 2011, a lawsuit was filed in the Superior Court of the State of Washington, in and for Spokane County against certain officers and directors seeking unspecified damages on behalf of Itron, Inc. The complaint alleges that the defendants breached their fiduciary obligations to Itron with respect to the restatement of Itron's financial results for the quarters ended March 31, June 30, and September 30, 2010. This lawsuit is a shareholder derivative action that purports to assert claims on behalf of Itron, Inc. In June 2011, a lawsuit was filed in the United States District Court for the Eastern District of Texas alleging infringement of three patents owned by EON Corp. IP Holdings, LLC (EON), related to two-way communication networks, network components, and related software platforms. The complaint seeks unspecified damages as well as injunctive relief. Although the complaint was filed, it has not been served and Itron has received a letter from EON requesting settlement discussions. We believe these claims are without merit and we intend to vigorously defend our interests. We do not believe this matter will have a material adverse effect on our business or financial condition, although an unfavorable outcome could have a material adverse effect on our results of operations for the period in which the claim is resolved. Warranty A summary of the warranty accrual account activity is as follows:
Total warranty expense is classified within cost of revenues and consists of new product warranties issued and other changes and adjustments to warranties. Warranty expense associated with our segments for the three and six months ended June 30 is as follows:
Warranty expense for the six months ended June 30, 2011 for Itron International reflects an $8.6 million recovery from a third party, associated with the settlement of product claims in Sweden in 2010, and a warranty charge of $7.7 million related to certain products in Brazil. Warranty expense for the six months ended June 30, 2010 for Itron International included $9.6 million related to the resolution of claims in Sweden. Extended Warranty A summary of changes to unearned revenue for extended warranty contracts is as follows:
Health Benefits We are self insured for a substantial portion of the cost of our U.S. employee group health insurance. We purchase insurance from a third party, which provides individual and aggregate stop loss protection for these costs. Each reporting period, we expense the costs of our health insurance plan including paid claims, the change in the estimate of incurred but not reported (IBNR) claims, taxes, and administrative fees (collectively, the plan costs). Plan costs are as follows:
IBNR accrual, which is included in wages and benefits payable, are as follows:
Our IBNR accrual and expenses may fluctuate due to the number of plan participants, claims activity, and deductible limits. For our employees located outside of the United States, health benefits are provided primarily through governmental social plans, which are funded through employee and employer tax withholdings. Restructuring As a result of our global segment reorganization that was announced in March 2011, we are performing a comprehensive review of our cost structure. We are also completing a feasibility study of our manufacturing footprint to determine how to consolidate our manufacturing operations to reduce costs and improve efficiency. Once these plans are formalized and approved by management, which we expect to be complete in October 2011, we will provide estimated charges by category. Restructuring costs of $1.9 million were recorded in the second quarter of 2011 primarily associated with severance for positions that were eliminated in the second quarter. |
Commitments and Contingencies Extended Warranty (Details) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Beginning balanace | $ 17,193 | $ 7,459 | $ 14,637 | $ 5,870 |
Unearned revenue for new extended warranties | 2,215 | 2,587 | 5,148 | 4,546 |
Unearned revenue recognized | (299) | (381) | (676) | (751) |
Ending balance, June 30 | 19,109 | 9,665 | 19,109 | 9,665 |
Extended Warranties Unearned Revenue Current | 1,160 | 1,319 | 1,160 | 1,319 |
Long-term unearned revenue for extended warranty within Other long-term obligations | $ 17,949 | $ 8,346 | $ 17,949 | $ 8,346 |
Commitments and Contingencies Available Lines of Credit, Outstanding Standby Letter of Credits, and Bonds (Details) (USD $)
In Thousands |
Jun. 30, 2011
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Dec. 31, 2010
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Line of Credit Facility [Line Items] | ||||||||
Unsecured Surety Bonds In Force | $ 133,352 | $ 120,109 | ||||||
Credit Facility [Member]
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Line of Credit Facility [Line Items] | ||||||||
Line of credit | 315,000 | [1] | 240,000 | [1] | ||||
Standby letters of credit issued and outstanding | (39,970) | [1] | (43,540) | [1] | ||||
Net available for additional borrowings and lines of credit | 275,030 | [1] | 196,460 | [1] | ||||
Unsecured Multicurrency Revolving Lines of Credit [Member]
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Line of Credit Facility [Line Items] | ||||||||
Line of credit | 74,685 | 49,122 | ||||||
Standby letters of credit issued and outstanding | (32,329) | (21,784) | ||||||
Short-term borrowings | (264) | [2] | (66) | [2] | ||||
Net available for additional borrowings and lines of credit | $ 42,092 | $ 27,272 | ||||||
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Commitments and Contingencies Commitments and Contingencies (Tables)
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Schedule of Line of Credit Facilities [Table Text Block] | Our available lines of credit, outstanding standby LOC’s, and bonds are as follows:
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Schedule of Warranty Accruals [Table Text Block] | A summary of the warranty accrual account activity is as follows:
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Warranty Expense by Segment [Table Text Block] | Warranty expense associated with our segments for the three and six months ended June 30 is as follows:
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Schedule of Changes to Unearned Revenue for Extended Warranty [Table Text Block] | A summary of changes to unearned revenue for extended warranty contracts is as follows:
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Health Benefit Plan Costs and Incurred But Not Reported Accrual Balance [Table Text Block] | Plan costs are as follows:
IBNR accrual, which is included in wages and benefits payable, are as follows:
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Stock-Based Compensation (Text Block)
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Share-based Compensation, Allocation and Classification in Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation [Text Block] | Stock-Based Compensation We record stock-based compensation expense for awards of stock options, stock sold pursuant to our ESPP, and the issuance of restricted stock units and unrestricted stock awards. We expense stock-based compensation primarily using the straight-line method over the vesting requirement period. For the three and six months ended June 30, stock-based compensation expense and the related tax benefit were as follows:
We issue new shares of common stock upon the exercise of stock options or when vesting conditions on restricted stock units are fully satisfied. The fair values of stock options granted were estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:
(1) There were no employee stock options granted for the three months ended June 30, 2011 and 2010. Expected volatility is based on a combination of historical volatility of our common stock and the implied volatility of our traded options for the related expected life period. We believe this combined approach is reflective of current and historical market conditions and an appropriate indicator of expected volatility. The risk-free interest rate is the rate available as of the award date on zero-coupon U.S. government issues with a term equal to the expected life of the award. The expected life is the weighted average expected life of an award based on the period of time between the date the award is granted and the date an estimate of the award is fully exercised. Factors considered in estimating the expected life include historical experience of similar awards, contractual terms, vesting schedules, and expectations of future employee behavior. We have not paid dividends in the past and do not plan to pay dividends in the foreseeable future. Subject to stock splits, dividends, and other similar events, 3,500,000 shares of common stock are reserved and authorized for issuance under our 2010 Stock Incentive Plan (Stock Incentive Plan). Awards consist of stock options, restricted stock units, and unrestricted stock awards. At June 30, 2011, 2,178,243 shares were available for grant under the Stock Incentive Plan. Stock Options Options to purchase our common stock are granted to employees and the Board of Directors with an exercise price equal to the market close price of the stock on the date the Board of Directors approves the grant. Options generally become exercisable in three equal annual installments beginning one year from the date of grant and generally expire 10 years from the date of grant. Compensation expense is recognized only for those options expected to vest, with forfeitures estimated based on our historical experience and future expectations. A summary of our stock option activity for the six months ended June 30 is as follows:
As of June 30, 2011, total unrecognized stock-based compensation expense related to nonvested stock options was approximately $2.4 million, which is expected to be recognized over a weighted average period of approximately 1.1 years. Restricted Stock Units Certain employees and senior management receive restricted stock units as a component of their total compensation. The fair value of a restricted stock unit is the market close price of our common stock on the date of grant. Restricted stock units generally vest over a three year period. Compensation expense, net of forfeitures, is recognized over the vesting period. Subsequent to vesting, the restricted stock units are converted into shares of our common stock on a one-for-one basis and issued to employees. We are entitled to an income tax deduction in an amount equal to the taxable income reported by the employees upon vesting of the restricted stock units. The restricted stock units issued under the Long Term Performance Restricted Stock Unit Award Agreement (Performance Award Agreement) are determined based on the attainment of annual performance goals after the end of the calendar year performance period. During the year, if management determines that it is probable that the targets will be achieved, compensation expense, net of forfeitures, is recognized on a straight-line basis over the annual performance and subsequent vesting period for each separately vesting portion of the award. Performance awards typically vest and are released in three equal installments at the end of each year following attainment of the performance goals. For U.S. participants who retire during the performance period, a pro-rated number of restricted stock units (based on the number of days of employment during the performance period) immediately vest based on the attainment of the performance goals as assessed after the end of the performance period. During the vesting period, unvested restricted stock units immediately vest at the date of retirement for U.S. participants who retire during that period. For U.S. participants who are or will become retirement eligible during either the annual performance or vesting period, compensation expense is accelerated and recognized over the greater of the performance period (one year) or the participant’s retirement eligible date. For performance awards granted in 2011, the maximum restricted stock units that may become eligible for vesting is 150,000 with a grant date fair value of $56.75. The following table summarizes restricted stock unit activity for the six months ended June 30:
At June 30, 2011, unrecognized compensation expense was $26.0 million, which is expected to be recognized over a weighted average period of approximately 2.2 years. Unrestricted Stock Awards We issue unrestricted stock awards to our Board of Directors as part of their compensation. Awards are fully vested and expensed when issued. The fair value of unrestricted stock awards is the market close price of our common stock on the date of grant. The following table summarizes unrestricted stock award activity for the three and six months ended June 30:
Employee Stock Purchase Plan Under the terms of the ESPP, employees can deduct up to 10% of their regular cash compensation to purchase our common stock at a 15% discount from the fair market value of the stock at the end of each fiscal quarter, subject to other limitations under the plan. The sale of the stock occurs at the beginning of the subsequent quarter. The following table summarizes ESPP activity for the three and six months ended June 30:
At June 30, 2011, all compensation cost associated with the ESPP had been recognized. There were approximately 154,000 shares of common stock available for future issuance under the ESPP at June 30, 2011. |
Certain Balance Sheet Components Inventories (Details) (USD $)
In Thousands |
Jun. 30, 2011
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Dec. 31, 2010
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Inventories [Line Items] | ||
Materials | $ 132,303 | $ 106,021 |
Work in process | 26,058 | 18,389 |
Finished goods | 94,718 | 83,747 |
Total inventories | $ 253,079 | $ 208,157 |
Earnings Per Share and Capital Structure (Text Block)
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Jun. 30, 2011
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share and Capital Structure [Text Block] | Earnings Per Share and Capital Structure The following table sets forth the computation of basic and diluted earnings per share (EPS):
Convertible Notes We are required, pursuant to the indenture for the convertible notes, to settle the principal amount of the convertible notes in cash and may elect to settle the remaining conversion obligation (stock price in excess of conversion price) in cash, shares, or a combination. We include in the EPS calculation the amount of shares it would take to satisfy the conversion obligation, assuming that all of the convertible notes are converted. The average quarterly closing prices of our common stock were used as the basis for determining the dilutive effect on EPS. The average price of our common stock for the three and six months ended June 30, 2011 did not exceed the conversion price of $65.16 and, therefore, did not have an effect on diluted EPS. The average price of our common stock for the three and six months ended June 30, 2010 exceeded the conversion price of $65.16 and, therefore, approximately 283,000 and 206,000 shares have been included in the diluted EPS calculation for those respective periods. Stock-based Awards For stock-based awards, the dilutive effect is calculated using the treasury stock method. Under this method, the dilutive effect is computed as if the awards were exercised at the beginning of the period (or at time of issuance, if later) and assumes the related proceeds were used to repurchase common stock at the average market price during the period. Related proceeds include the amount the employee must pay upon exercise, future compensation cost associated with the stock award, and the amount of excess tax benefits, if any. Approximately 672,000 and 664,000 stock-based awards were excluded from the calculation of diluted EPS for the three and six months ended June 30, 2011, and approximately 308,000 and 385,000 stock-based awards were excluded from the calculation of diluted EPS for the three and six months ended June 30, 2010, respectively, because they were anti-dilutive. These stock-based awards could be dilutive in future periods. Preferred Stock We have authorized the issuance of 10 million shares of preferred stock with no par value. In the event of a liquidation, dissolution, or winding up of the affairs of the corporation, whether voluntary or involuntary, the holders of any outstanding preferred stock will be entitled to be paid a preferential amount per share to be determined by the Board of Directors prior to any payment to holders of common stock. Shares of preferred stock may be converted into common stock based on terms, conditions, and rates as defined in the Rights Agreement, which may be adjusted by the Board of Directors. There was no preferred stock sold or outstanding at June 30, 2011 and December 31, 2010. |
Income Taxes Possible Change To Unrecognized Tax Benefits (Details) (USD $)
In Millions |
Jun. 30, 2011
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Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |
Amount of unrecognized tax benefits that may reasonably possibly decrease within 12 months | $ 4.4 |
Goodwill (Text Block)
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Goodwill Disclosure [Text Block] | Goodwill The following table reflects goodwill allocated to each reporting segment at June 30, 2011 and 2010:
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Summary of Significant Accounting Policies Income Tax Policy Additional Information (Details)
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6 Months Ended |
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Jun. 30, 2011
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Income Tax Contingency [Line Items] | |
Income Tax Examination Likelihood Of Favorable Settlement Minimum For Recognition | 50.00% |
Income Taxes Income Taxes (Tables)
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Net Interest And Penalties [Table Text Block] | The net interest and penalties expense (benefit) recognized is as follows:
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Accrued Interest And Penalties [Table Text Block] | Accrued interest and penalties recorded are as follows:
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Unrecognized Tax Benefits Related To Uncertain Tax Positions [Table Text Block] | Unrecognized tax benefits related to uncertain tax positions and the amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate are as follows:
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Segment Information Information By Segment (Details) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Segment Reporting Information [Line Items] | ||||
Revenues | $ 612,401 | $ 567,339 | $ 1,176,092 | $ 1,064,962 |
Gross profit | 191,083 | 174,056 | 375,193 | 331,120 |
Operating Income (Loss) | 48,085 | 50,009 | 98,174 | 81,628 |
Total other income (expense) | (13,729) | (14,279) | (27,131) | (29,627) |
Income (Loss) Before Income Taxes | 34,356 | 35,730 | 71,043 | 52,001 |
Depreciation and amortization | 32,768 | 31,793 | 64,299 | 65,071 |
Itron North America [Member]
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Segment Reporting Information [Line Items] | ||||
Revenues | 288,224 | 301,143 | 565,206 | 542,702 |
Gross profit | 96,958 | 100,972 | 191,680 | 179,131 |
Operating Income (Loss) | 42,739 | 55,384 | 86,532 | 87,420 |
Depreciation and amortization | 11,176 | 11,441 | 22,347 | 22,728 |
Itron International [Member]
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Segment Reporting Information [Line Items] | ||||
Revenues | 324,177 | 266,196 | 610,886 | 522,260 |
Gross profit | 94,125 | 73,084 | 183,513 | 151,989 |
Operating Income (Loss) | 16,483 | 5,017 | 32,711 | 15,454 |
Depreciation and amortization | 21,591 | 20,352 | 41,950 | 42,342 |
Corporate Unallocated [Member]
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Segment Reporting Information [Line Items] | ||||
Operating Income (Loss) | (11,137) | (10,392) | (21,069) | (21,246) |
Depreciation and amortization | $ 1 | $ 0 | $ 2 | $ 1 |
Intangible Assets Estimated Future Annual Amortization Expense (Details) (USD $)
In Thousands |
6 Months Ended |
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Jun. 30, 2011
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Finite-Lived Intangible Assets [Line Items] | |
2011 Amount remaining at June 30 | $ 32,306 |
2012 | 50,234 |
2013 | 41,442 |
2014 | 34,082 |
2015 | 27,997 |
Beyond 2015 | 106,869 |
Total intangible assets net | $ 292,930 |
Debt Schedule of Debt (Details)
In Thousands |
Jun. 30, 2011
USD ($)
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Dec. 31, 2010
USD ($)
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Jun. 30, 2011
USD Denominated Term Loan [Member]
USD ($)
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Dec. 31, 2010
USD Denominated Term Loan [Member]
USD ($)
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Jun. 30, 2011
EUR Denominated Term Loan [Member]
EUR (€)
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Jun. 30, 2011
EUR Denominated Term Loan [Member]
USD ($)
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Dec. 31, 2010
EUR Denominated Term Loan [Member]
EUR (€)
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Dec. 31, 2010
EUR Denominated Term Loan [Member]
USD ($)
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Debt Instrument [Line Items] | ||||||||
Term loans | $ 200,616 | $ 218,642 | € 105,800 | $ 151,350 | € 132,400 | $ 174,031 | ||
Convertible senior subordinated debt | 223,604 | 218,268 | ||||||
Total debt | 575,570 | 610,941 | ||||||
Current portion of long term debt | (234,449) | (228,721) | ||||||
Long-term debt | $ 341,121 | $ 382,220 |
Certain Balance Sheet Components Summary of the Allowance for Doubtful Accounts (Details) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Summary of Allowance for Doubtful Accounts Activity [Line Items] | ||||
Beginning balance | $ 9,030 | $ 5,870 | $ 9,045 | $ 6,339 |
Provision (release) of doubtful accounts, net | 298 | 742 | (48) | 662 |
Accounts written-off | (505) | (43) | (552) | (173) |
Effects of change In exchange rates | 157 | (271) | 535 | (530) |
Ending balance | $ 8,980 | $ 6,298 | $ 8,980 | $ 6,298 |
Debt Convertible Senior Subordinated Notes Additional Information (Details) (USD $)
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6 Months Ended | |||||||||
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Jun. 30, 2011
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Dec. 31, 2010
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Jun. 30, 2011
Option of the Holders [Member]
Convertible Debt [Member]
Senior Subordinated Notes [Member]
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Jun. 30, 2011
Option of the Holders [Member]
Convertible Debt [Member]
Senior Subordinated Notes [Member]
On August 1, 2011 [Member]
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Jun. 30, 2011
Option of the Holders [Member]
Convertible Debt [Member]
Senior Subordinated Notes [Member]
On August 1, 2016 [Member]
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Jun. 30, 2011
Option of the Holders [Member]
Convertible Debt [Member]
Senior Subordinated Notes [Member]
On August 1, 2021 [Member]
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Jun. 30, 2011
Option of the Company [Member]
Convertible Debt [Member]
Senior Subordinated Notes [Member]
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Jun. 30, 2011
Option of the Company [Member]
Convertible Debt [Member]
Senior Subordinated Notes [Member]
On or After August 1, 2011 [Member]
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Jun. 30, 2011
Convertible Debt [Member]
Senior Subordinated Notes [Member]
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Aug. 04, 2006
Convertible Debt [Member]
Senior Subordinated Notes [Member]
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Convertible Senior Subordinated Notes [Line Items] | ||||||||||
Debt instrument, face amount | $ 223,604,000 | $ 223,604,000 | $ 345,000,000 | |||||||
Debt instrument, interest rate, stated percentage | 2.50% | |||||||||
Contingent interest payment rate | 0.19% | |||||||||
Debt instrument, convertible, conversion ratio | 15.3478 | |||||||||
Principal amount of convertible note for conversion rate | $ 1,000 | |||||||||
Common stock closing price threshold for conversion | $ 78.19 | |||||||||
Stock price exceeding conversion price | 120.00% | |||||||||
Debt instrument, convertible, conversion price | $ 65.16 | $ 65.16 | ||||||||
Conversion threshold minimum trading days | 20 | |||||||||
Conversion threshold consecutive trading day period | 30 | |||||||||
Conversion threshold trading price of convertible note to conversion value | 98.00% | |||||||||
Closing stock price per common share | $ 48.16 | |||||||||
Percent of principal amount redemption price | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | |||
Ownership percentage of subsidiary guarantor | 100.00% | |||||||||
Estimated nonconvertible debt borrowing rate | 7.38% | |||||||||
Debt Instrument, Convertible, Effective Interest Rate | 7.38% |
Debt (Text Block)
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Jun. 30, 2011
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt [Text Block] | Debt The components of our borrowings are as follows:
Credit Facility Our credit facility is dated April 18, 2007 and includes two amendments dated April 24, 2009 and February 10, 2010. The principal balance of our euro denominated term loan at June 30, 2011 and December 31, 2010 was €105.8 million and €132.4 million, respectively. Interest rates on the credit facility are based on the respective borrowing's denominated London Interbank Offered Rate (LIBOR) or the Wells Fargo Bank, National Association's prime rate, plus an additional margin subject to our consolidated leverage ratio. The additional interest rate margin was 3.50% at June 30, 2011. Our interest rates were 3.70% for the U.S. dollar denominated and 4.72% for the euro denominated term loans at June 30, 2011. Scheduled amortization of principal payments is 1% per year (0.25% quarterly) with an excess cash flow provision for additional annual principal repayment requirements. The amount of the excess cash flow provision payment varies according to our consolidated leverage ratio. Maturities of the term loans and the multicurrency revolving line of credit are in April 2014 and 2013, respectively. The credit facility is secured by substantially all of the assets of Itron, Inc. and our U.S. domestic operating subsidiaries and includes covenants, which contain certain financial ratios and place restrictions on the incurrence of debt, the payment of dividends, certain investments, incurrence of capital expenditures above a set limit, and mergers. The credit facility includes a multicurrency revolving line of credit, which was increased from $240 million to $315 million on January 20, 2011. The increase was completed under the terms of the credit facility. Prepaid debt fees of $379,000 were capitalized associated with the increase in the credit line. There were no other changes to the credit facility. At June 30, 2011, there were no borrowings outstanding under the revolving line of credit, and $40.0 million was utilized by outstanding standby letters of credit, resulting in $275.0 million being available for additional borrowings. We repaid $2.7 million and $55.6 million of the term loans during the three and six months ended June 30, 2011, respectively. Repayments of $21.1 million and $73.9 million were made during the three and six months ended June 30, 2010, respectively. These term loan repayments were made with cash flows from operations and cash on hand. We were in compliance with the debt covenants under the credit facility at June 30, 2011. Convertible Senior Subordinated Notes On August 4, 2006, we issued $345 million of 2.50% convertible notes due August 2026. Fixed interest payments are required every six months, in February and August of each year. For each six month period beginning August 2011, contingent interest payments of approximately 0.19% of the average trading price of the convertible notes will be made if certain thresholds are met or events occur, as outlined in the indenture. The convertible notes are registered with the SEC and are generally transferable. Our convertible notes are not considered conventional convertible debt as the number of shares, or cash, to be received by the holders was not fixed at the inception of the obligation. We have concluded that the conversion feature of our convertible notes does not need to be bifurcated from the host contract and accounted for as a freestanding derivative, as the conversion feature is indexed to our own stock and would be classified within stockholders’ equity if it were a freestanding instrument. The convertible notes may be converted at the option of the holder at a conversion rate of 15.3478 shares of our common stock for each $1,000 principal amount of the convertible notes, under the following circumstances, as defined in the indenture:
The amount payable upon conversion is the result of a formula based on the closing prices of our common stock for 20 consecutive trading days following the date of the conversion notice. Based on the conversion ratio of 15.3478 shares per $1,000 principal amount of the convertible notes, if our stock price is lower than the conversion price of $65.16, the amount payable will be less than the $1,000 principal amount and will be settled in cash. Our closing stock price at June 30, 2011 was $48.16 per share. Upon conversion, the principal amount of the convertible notes will be settled in cash and, at our option, the remaining conversion obligation (stock price in excess of conversion price) may be settled in cash, shares, or a combination. The conversion rate for the convertible notes is subject to adjustment upon the occurrence of certain corporate events, as defined in the indenture, to ensure that the economic rights of the convertible note holders are preserved. The convertible notes also contain purchase options, at the option of the holders, which if exercised would require us to repurchase all or a portion of the convertible notes on August 1, 2011, August 1, 2016, and August 1, 2021 at 100% of the principal amount, plus accrued and unpaid interest. If we are required to purchase the convertible notes at 100% of the principal amount, no gain or loss would be recognized upon derecognition as the fair value of the consideration transferred to the holder would equal the fair value of the liability component. On or after August 1, 2011, we have the option to redeem all or a portion of the convertible notes at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest. If we elect to redeem all or a portion of the convertible notes at 100% of the principal amount, no gain or loss would be recognized upon derecognition as the fair value of the consideration transferred to the holder would equal the fair value of the liability component. The convertible notes are unsecured, subordinated to our credit facility (senior secured borrowings), and are guaranteed by one U.S. subsidiary, which is 100% owned. The convertible notes contain covenants, which place restrictions on the incurrence of debt and certain mergers. We were in compliance with these debt covenants at June 30, 2011. The convertible notes are classified as current on the Consolidated Balance Sheet due to the combination of put, call, and conversion options occurring in 2011. Our convertible notes are separated between the liability and equity components using our estimated non-convertible debt borrowing rate at the time our convertible notes were issued, which was determined to be 7.38%. This rate also reflects the effective interest rate on the liability component. The equity component would be retained as a permanent component of our shareholders' equity in the event the convertible notes are either purchased or redeemed at 100% of the principal amount. At June 30, 2011, the discount on the liability component was fully amortized. The carrying amounts of the debt and equity components are as follows:
The interest expense relating to both the contractual interest coupon and amortization of the discount on the liability component are as follows:
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Stock-Based Compensation Stock Option Black Scholes Option Pricing Model Assumptions (Details) (Employee Stock Option [Member])
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3 Months Ended | 6 Months Ended | ||||||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Employee Stock Option [Member]
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | ||||||||
Dividend yield | 0.00% | [1] | 0.00% | [1] | 0.00% | 0.00% | ||
Expected volatility | 0.00% | [1] | 0.00% | [1] | 46.60% | 48.70% | ||
Risk free interest rate | 0.00% | [1] | 0.00% | [1] | 2.00% | 2.30% | ||
Expected life (years) | 0 | [1] | 0 | [1] | 4.85 | 4.61 | ||
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Summary of Significant Accounting Policies Consolidated Statement of Operations Restatement (Details) (USD $)
In Thousands, except Per Share data |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Revenue | $ 612,401 | $ 567,339 | $ 1,176,092 | $ 1,064,962 |
Cost of revenues | 421,318 | 393,283 | 800,899 | 733,842 |
Gross profit | 191,083 | 174,056 | 375,193 | 331,120 |
Operating income | 48,085 | 50,009 | 98,174 | 81,628 |
Income before income taxes | 34,356 | 35,730 | 71,043 | 52,001 |
Income tax (provision) benefit | 80 | (10,419) | (9,487) | (1,440) |
Net income | 34,436 | 25,311 | 61,556 | 50,561 |
Earnings per common share-Basic | $ 0.85 | $ 0.63 | $ 1.52 | $ 1.26 |
Earnings per common share-Diluted | $ 0.84 | $ 0.61 | $ 1.50 | $ 1.23 |
Scenario, Previously Reported [Member]
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Revenue | 569,460 | 1,068,740 | ||
Cost of revenues | 393,136 | 733,521 | ||
Gross profit | 176,324 | 335,219 | ||
Operating income | 52,277 | 85,727 | ||
Income before income taxes | 37,998 | 56,100 | ||
Income tax (provision) benefit | (11,098) | (2,413) | ||
Net income | 26,900 | 53,687 | ||
Earnings per common share-Basic | $ 0.67 | $ 1.33 | ||
Earnings per common share-Diluted | $ 0.65 | $ 1.31 | ||
As restated [Member]
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Revenue | 567,339 | 1,064,962 | ||
Cost of revenues | 393,283 | 733,842 | ||
Gross profit | 174,056 | 331,120 | ||
Operating income | 50,009 | 81,628 | ||
Income before income taxes | 35,730 | 52,001 | ||
Income tax (provision) benefit | (10,419) | (1,440) | ||
Net income | $ 25,311 | $ 50,561 | ||
Earnings per common share-Basic | $ 0.63 | $ 1.26 | ||
Earnings per common share-Diluted | $ 0.61 | $ 1.23 |
Derivative Financial Instruments Derivative Financial Instruments (Tables)
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Jun. 30, 2011
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Derivative Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | The fair values of our derivative instruments determined using the fair value measurement of significant other observable inputs (Level 2) at June 30, 2011 and December 31, 2010 are as follows:
* The euro denominated term loan is a nonderivative financial instrument designated as a hedge of our net investment in international operations. It is recorded at its carrying value in the Consolidated Balance Sheets and is not recorded at fair value. |
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Accumulated OCI for Derivative and Nonderivative Instruments Designated as Hedging Instruments, Net of Tax [Table Text Block] | OCI during the reporting period for our derivative and nonderivative instruments designated as hedging instruments (collectively, hedging instruments), net of tax, was as follows:
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Effect of Cash Flow Derivatives on the Balance Sheet and Income Statement, Before Tax [Table Text Block] | The before tax effect of our cash flow derivative instruments on the Consolidated Balance Sheets and the Consolidated Statements of Operations for the three and six months ended June 30 are as follows:
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Schedule of Net Investment Hedges in Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The before tax and net of tax effects of our net investment hedge nonderivative financial instrument on OCI for the three and six months ended June 30 are as follows:
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Foreign Exchange Derivatives Not Designated As Hedging Instruments [Table Text Block] | The effect of our foreign exchange forward derivative instruments on the Consolidated Statements of Operations for the three and six months ended June 30 is as follows:
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Derivative Financial Instruments Derivative and Nonderivative Hedging Instrument Fair Value Disclosure (Details) (USD $)
In Thousands |
Jun. 30, 2011
|
Dec. 31, 2010
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Liability Derivatives [Abstract] | ||||||
Current portion of euro denominated term loan | $ 234,449 | $ 228,721 | ||||
Long-term portion of Euro denominated term loan | 341,121 | 382,220 | ||||
Total liability derivatives | 154,127 | 181,308 | ||||
EUR Denominated Term Loan [Member] | Designated as Hedging Instrument [Member] | Current Portion of Debt [Member]
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Liability Derivatives [Abstract] | ||||||
Current portion of euro denominated term loan | 4,794 | [1] | 4,402 | [1] | ||
EUR Denominated Term Loan [Member] | Designated as Hedging Instrument [Member] | Long-term Debt [Member]
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Liability Derivatives [Abstract] | ||||||
Long-term portion of Euro denominated term loan | 146,556 | [1] | 169,629 | [1] | ||
Designated as Hedging Instrument [Member]
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Liability Derivatives [Abstract] | ||||||
Total liability derivatives | 153,927 | 180,851 | ||||
Designated as Hedging Instrument [Member] | Other Current Liabilities [Member]
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Liability Derivatives [Abstract] | ||||||
Interest rate swap contracts | 2,395 | 5,845 | ||||
Designated as Hedging Instrument [Member] | Other Long Term Obligations [Member]
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Liability Derivatives [Abstract] | ||||||
Interest rate swap contracts | 182 | 975 | ||||
Other Current Assets [Member]
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Asset Derivatives [Abstract] | ||||||
Foreign exchange forward contracts asset | 171 | 63 | ||||
Other Current Liabilities [Member]
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Liability Derivatives [Abstract] | ||||||
Foreign exchange forward contracts liability | $ 200 | $ 457 | ||||
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